In the digital sphere, original contracts and documents containing eSignatures are known as authoritative copies. These documents, which prove the right to certain financial proceeds, must be unique and stored in a vault to prevent duplication for the purposes of fraud.
Authoritative copies are recognized by the ESIGN and UETA laws, as well as Article 9 of the Uniform Commercial Code (9-105). ESIGN and UETA specifically address the management of documents used in mortgages and loans, while 9-105 applies to the financing of goods, such as cars and equipment. Such financing contracts are referred to as electronic chattel paper.
The laws surrounding the use of authoritative copies were designed to ensure the integrity of electronic chattel paper and maintain authoritative copies even once they are stored outside their owner’s physical custody.
Legal Characteristics of an Authoritative Copy and Electronic Chattel Paper
For a document to be considered an authoritative copy:
- It cannot have been altered since it was delivered
- If it was intended to be signed, it cannot have been altered since it was required to be signed or actually signed
- It must be marked “original” and have no watermark or other indication that it is a copy or duplicate.
Chattel paper is a document that shows that the holder is owed money and has a security interest in valuable goods tied with the debt. While in the past chattel paper was a physical paper, today it is commonly found in digital form. It requires an authoritative copy to be legally binding. While other copies may exist, they need to be distinguished from the authoritative copy using the above guidelines. Note that in cases where the physical chattel paper is digitized and an authoritative copy is required, it may be needed to show that the physical chattel paper no longer exists or mark it to show that it is not the authoritative copy.
The rules regulating electronic chattel paper clearly delineated in a legal code governing secured transactions called “UCC 9-105 Control of Electronic Chattel Paper”. he legal code clearly states the rules surrounding the management of this electronic chattel paper:
A secured party has control of electronic chattel paper if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that:
(A) A single authoritative copy of the record or records exists that is unique, identifiable, and, except as otherwise provided in divisions (D), (E), and (F) of this section, unalterable;
(B) The authoritative copy identifies the secured party as the assignee of the record or records;
(C) The authoritative copy is communicated to and maintained by the secured party or its designated custodian;
(D) Copies or revisions that add or change an identified assignee of the authoritative copy may be made only with the participation of the secured party;
(E) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and
(F) Any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.
How to Extract and Store an Authoritative Copy of a Signed Document
Documents that are sent electronically and include eSignatures have an authoritative copy, which is owned by the person who sends the documents and is connected to the transaction’s session but hosted by the eSignature provider.
After the signer provides their eSignature, the authoritative copy goes through a process known as vaulting. Vaulting refers to the transferring of the authoritative copy outside the eSignature provider’s custody to be stored in an external provider.
If a company or individual handling an authoritative copy closes their account or deletes the session without vaulting, the authoritative copy will disappear.
Many eSignature providers who offer vaulting do so as an advanced feature. Companies working in the financial services industry are most likely to require this capability, although eSignature providers see applications in the following areas:
- Auto finance
- Personal loans
- Equipment leasing
- Security alarm systems
What is a Vaultable Document, and What is EVault?
Once an authoritative copy is signed and ready to be vaulted, the company must find a provider that is capable of safely archiving (vaulting) it.
One such product is EVault, which is part of Carbonite. EVault was originally founded in 1997 as a cloud services company., though it has expanded its offerings significantly since then.
EVault and its partners provide on-premise, cloud-based, and hybrid data backup and recovery services. It primarily serves companies in highly regulated industries such as the financial sector, government, law, healthcare, telecommunications, and more. It is based in Boston, Massachusetts, but retains sales, service, and data center operations across the world.
EVault supports disk-based software, appliances, and SaaS, all of which share the same platform. EVault’s customers are encouraged to deploy EVault for both on-premise and offsite technologies as a hybrid cloud-connected solution.
The following EVault products and services are currently available to customers:
- EVault SaaS for cloud-based backup and recovery.
- EVault Cloud Disaster Recovery Service for managed recovery in the EVault cloud with 4-, 24, and 48-hour Service Level Agreements.
- EVault Plug-n-Protect for appliance-based, on-premises, all-in-one backup and recovery.
- EVault Software for disk-to-disk, on-premises backup and recovery.
- EVault Endpoint Protection for integrated backup, recovery, and data security for laptops and desktops.
Companies in highly regulated industries need to ensure that legally binding documents have an authoritative copy that’s distinguishable from any other versions. This is especially true for electronic chattel paper due to the sensitive financial dimension. Authoritative copies must be securely vaulted, and companies such as EVault can ensure this happens in a safe and secure way. Learn how Lightico collects and stores authoritative copies quickly and easily at Lightico.com.