Admissible computer business records evidence at trial, such as a payment history to demonstrate that an account is delinquent, is governed by state and federal procedural rules. These rules typically require testimony by an individual who is familiar with the particular computer system and how data entry occurs. However, particularly if there have been transfers or assignments of the account in question, the firm attempting to provide evidence of the payment history may not have an employee who is familiar with the original system. That may be a source of trouble.
Business records are an exception to the hearsay rule. Hearsay involves statements that the individual testifying has no direct knowledge of. For example, if A tells B that it is raining and B has no access to a window to verify this information, it is hearsay for B to testify that it is raining. A may be mistaken or lying and no amount of cross-examination of B will reveal this. Business records may reveal a payment history but does the witness in question have sufficient knowledge to demonstrate their accuracy?
Hence, most procedural rules require a four step process to introduce business records into evidence.
1. The record must be made on or near the time of the event that it reports.
2. The record must be made by or from information transmitted by a person with knowledge of the facts.
3. The record must be kept in the course of a regularly conducted business activity.
4. It must be the regular practice of the business to make such a record. While a witness need not know the name of the data entry person, a witness must be able to testify how the particular computer accounting system works and overall procedures to verify the accuracy of the information in the system.
Sometimes when there have been multiple transfers of an underlying property mortgage or promissory note, linkage back to the original business record data entry has been broken. Attempts to cure this lack of knowledge of the creation of the original record might involve sworn statements (affidavits) attached to print-outs of the original firm's records. These approaches may be challenged as having been created long-after the original record and hence not business records but "double hearsay." Double hearsay involves one person telling another information when neither has access to the original source. However, many courts have allowed such records into evidence, notable exceptions notwithstanding, especially when the borrower in some fashion acknowledged the underlying debt.
While the precise requirements may vary somewhat from jurisdiction to jurisdiction, it is noteworthy that businesses and their legal counsel should not take for granted the admissibly in evidence at trial of business records. It is appropriate to review with legal counsel how your computer business records are created and what employees might be qualified to testify as to their creation and accuracy at trial. This is especially important if your firm receives assignments of receivables. An adjustment of procedures today will prevent major difficulties tomorrow.