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We are all getting used to checking a box and putting our name in a text field to create a contract with an airline, a hosting company, or a software download. However, for some reason I am still asking clients to sign our contracts for website development on paper, and send me a scan. Few complain about this procedure, but I am personally thinking: what am I doing, doing this the old fashion way?! Signing contracts digitally would be faster, more convenient for clients and for me, and easier to store.

So to me it appears to be time to start creating some contract agreement online that clients can read, then print their name, and mark a box "I AGREE WITH THIS CONTRACT AND BY PRINTING MY NAME I AGREE TO SIGNING THIS", or something like that. I would record their IP, browser data, and time of signing. If I really want to ensure their identity, I could link this to OpenID and require them to log in with their e-mail so that I can ensure that they are logged in on an existing e-mail account. Sounds OK to me.

My question is: is this practice becoming a standard practice in professional IT services? Are you (as a professional) doing this? If you are, how do clients react? Any drawbacks doing this?

EDIT:

This question is not about the legal aspects. It is about common practices among programmers and web-development companies, and what clients think of this.

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closed as off topic by Thomas Owens Mar 23 '12 at 12:53

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It seems relevant to ask what sort of digital signing, if any, has been upheld in court cases. –  JGWeissman Mar 22 '12 at 22:58
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If you aren't interested in legal aspects you probably also want to remove the "any drawbacks doing this" part of your question. –  psr Mar 22 '12 at 23:46
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In all the time I've been using this site, the amount of people willing to ask a random developer a serious legal question, instead of consulting a professional in this field, i.e. a lawyer baffles me. –  Jas Mar 23 '12 at 9:31
    
I'm paper based all the way on this one. As far as I'm aware, the only Digital Signatures that are definitly legally binding are of the public/private key type. Simply ticking a box on a website or anything that does not identify the individual signing (not the computer they are doing it on) would potentially face a legal challenge. –  Jaydee Mar 23 '12 at 11:00
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As it's written now, this question is not unique to the software development profession. Aside from a few references to "professional IT services" and "web development companies", this could very easily be about any company in any industry. –  Thomas Owens Mar 23 '12 at 12:55

6 Answers 6

up vote 2 down vote accepted

It's definitely not a standard practice.

Ignoring the legal aspects, most larger companies that purchase IT services are organized with the expectation that there will be a paper contract. There are groups of people that review the terms of the contract. There are groups of people that review the cost. And quite possibly there is someone else with signature authority that has to actually sign the contract. For that sort of workflow, having a paper document to pass around makes everyone's life easier. And that's before considering the possibility that the customer requests a change to the terms of the contract

Digital signatures make much more sense for business to consumer transactions where the consumer is the one reviewing the contract (or, more likely, blindly accepting it), the consumer is the one that reviews the cost, and the consumer is the one that clicks the signature button because there is no need for any sort of workflow and no realistic option for the customer to request a change in the terms of the contract.

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Thanks, that was the kind of perspective I was looking for! Other answers are also interesting but this is about the practical side of things that I needed. –  user Mar 23 '12 at 21:24

Let's run trough your examples, shall we?

  • Airlines, hosting companies, and software downloads are all paid in advance.

  • Big Corps (many airlines, some hosting company, and some software house) that sell over the internet usually have troops of lawyers, paid by the hour, ready to challenge any judge and law that says their contracts, and the provisions in them, have no legal standing.

  • Airlines, anyway, don't make you (don't need you to) sign a contract when you buy a ticket in real life. (Software houses with prepackaged products, too: no signature when they give you a DVD in a big box)

  • Hosting companies may, physically, always terminate your service at any moment, without even telling you. If that happens, the fact the non-signed contract between you and them may be proven to have no legal standing, would only benefit them.

  • Software houses selling non-customized products by the download, have copyright in their favour and usually very little expenses directly associated with a single sale. If you don't pay, you have no right on your copy of the software, if you pay, you still only get a license to use it. (some of the clauses of it, still, may be non-enforceable - i.e. illegal) Anything you do with that software you downloaded that isn't using it on your own, is, by default, illegal, with or without a contract standing.

So, here's our problem: software houses that customize products for clients, (i.e. 90% of them) instead:

  • take big money from a little number of valued clients
  • usually only get a fraction of the price in advance
  • won't be able to pay employees if they lose one or two clients
  • are selling something that hasn't been written yet
  • are selling a product that may need to pass some certification
  • need to set a delivery date

Not getting paid or not getting the product you ordered is... pretty likely, and not funny.
You must be damn sure your contract stands in court, so, paper it is.

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It's sad how so many programmers think technology has all the solutions, when it's not really a problem that needs a solution, and worse - theres already one that works.

Paper signitures have been around for ever, are recognised by courts and have plenty of case law behind them. Digital signitures are new, not well understood (except by geeks such as us), complex and rely on technology, with virtually no case law behind them.

Legal cases that establish case law are long, drawn out, protracted and most importantly, expensive. Are you prepared to be the case that is used to establish case law? "Feeling lucky, well, are you punk.......".

Apart from that, your customers probably expect paper contract, and certainly will not reject them, and will be comfortable with them.

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Still almost 100% on paper, even getting signed hardcopies after scanning the originals.

I always assumed it was due to the legal standing, and difficulty tampering, but what do I know?

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the only way you can prove that the signer actually signed is to have some non-repudiation mechanism in place

one way is to use public private key pair but then you'd have to prove that the private key used actually belonged to the signer this requires either a trusted third party or a second channel

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If something ever went to court issues relating to how easy it would be to forge the signature might come up. Since it would be easy for you to forge acceptance by recording their IP, browser data, and time of signing without their actual signature or consent, it might be a problem to convince a judge or jury that they really agreed to the contract.

Also, I'm not a lawyer, and it's possible that things that make no sense to programmers have been specifically legislated regarding electronic signatures, or even faxed signatures. I'm just pointing out one possible issue with your proposed solution, there are certainly other issues regarding signatures, contracts, and the law that I'm unaware of.

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On the other hand, signatures with something like PGP if you're engaging someone a little more tech savvy are probably more likely to hold up. –  Matthew Scharley Mar 23 '12 at 0:44

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