When NDAs fail

Not all digital signatures are valid in the eyes of the law.

  • While electronic signatures can often conveniently be imprinted on a document using such electronic programs or tools such as Adobe Acrobat, Preview, or other popular PDF editors, there is a fundamental problem with using many such widely available programs for electronic signatures.
  • When electronically signing a document, it is essential that you use an app with the capabilities to track when, where, and who signed the document.

You are an entrepreneur who wants to protect some very important information.

An NDA protects you and your business from the unauthorized disclosure of proprietary or other important information by third parties, and is usually the best solution to achieve this goal.

Whenever using an NDA, you must ensure the agreement is legally binding on the recipient. The United States and the European Union have both enacted legal frameworks which require certain features in order to make an electronically signed document legally binding.

ESIGN (US) and eIDAS (EU) legal regulations require each electronically signed document to also contain an audit trail that includes the signer’s email address, the unique Internet Protocol address of the device used to sign the document, a document fingerprint, and a timestamp.

The problem with using PDF editors for signatures

In an age where traditional “wet” signatures are becoming less and less common (and are even beginning to seem antiquated in some circles), electronic signatures have come into the mainstream and are now being used all the time in all different sorts of settings.

Electronic signatures offer a number of advantages to the old process of printing out a document, signing it and then either mailing or emailing it. One of the most important things to understand, however, is not all electronic signatures are created equally.

While electronic signatures can often conveniently be imprinted on a document using such electronic programs or tools such as Adobe Acrobat, Preview, or other popular PDF editors, there is a fundamental problem with using many such widely available programs for electronic signatures.

Just because you add a signature to a PDF contract does not make the contract legally binding and verifiable.

The problem is simply that there is no way to prove the authenticity of the signature on many documents that are signed using most of the available programs out there.

When electronically signing a document, it is essential that you use an app with the capabilities to track when, where, and who signed the document.

Otherwise, you may find yourself with an unenforceable agreement or with a problem if you later attempt to enforce the agreement.

You could find yourself without any means of defending the agreement or the non-disclosure obligations you are attempting to hold an individual to if you lack an audit trail or some other mechanism to conclusively prove the individual actually signed the NDA in question.

What is an audit trail, and why is it so important?

Having an audit trail is important for many reasons. It is particularly important if there is ever a breach or a threatened breach of an NDA by a party. This scenario is unfortunately more common than many entrepreneurs may realize, as particularly in the technology sector employees and investors are exposed to all sorts of cutting edge ideas and information, the unauthorized disclosure of which can literally make or break a company.

You and your recipient need to have a verified audit trail is particularly important in the event of threatened or actual breaches of an NDA. If the NDA was electronically signed using a PDF editor that does not have audit trail capabilities, then the party that requested the NDA in the first place may have a serious problem.

Without an audit trail, the document suddenly is not legally binding in either the European Union or the United States.

The potential consequences of not having an audit trail?

The consequences of not having an audit trail can be catastrophic if things turn south with a party that is subject to an NDA.

A party who is resisting the provisions of an NDA is exactly the type of individual one needs an ironclad NDA to enforce against. For example, if you have to prosecute a claim of stealing trade secrets against a disgruntled contractor, but have no way to actually prove they actually signed a binding NDA.

Without this evidence, any legal claim the company may have against this contractor may fail because the individual or organization seeking to enforce an NDA would have no means to prove that the individual who is subject to the NDA actually signed the NDA.

Ensure that your electronically signed documents are verifiable

If you are an entrepreneur or business owner of any kind, and you have important information that you need to protect, a legally verifiable NDA often is the best means of doing so.

You must ensure that you and your recipient are electronically signing your NDA agreements in a way that complies with eSignature regulations.

Only by doing so can you ensure that your trade secrets, proprietary information or whatever information you may be sharing or seeking to share with a third party are truly protected to the maximum extent possible.

The Husch app can help you protect your confidential information.

NDAs created for entrepreneurs, sent securely, and stored in the cloud for the duration of the agreement. All, with an audit trail that will prove the signatures are valid and indeed authentic. Sign up and send your first NDA for free.

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