What is an electronic contract?
An electronic contract is an agreement made online that creates a mutual obligation between two parties and is enforceable under certain legal requirements. Rather than interacting in person or by phone, parties communicate digitally. Although an electric contract is digital, it is still a contract. The agreement creates a mutual obligation between two individuals or companies that must meet certain legal requirements in order to be enforceable.?
Examples of electronic contracts.?
Business agreements often use electronic contracts of various types. Contracts that are executed online combine the formalities of a traditional contract with the ease of accepting payments online. Depending on the scenarios in which your business will present agreements, you should use a specific type of electronic contract:?
Clickwrap agreements: By clicking ¡°I accept,¡± a user is bound to an electronic contract. Through a browsewrap, the user explicitly consents to the agreement, not implicitly.
Browsewrap agreements: These are notices that appear on mobile apps or websites. The terms and conditions of the agreement state that the user consents to the terms and conditions by using the app or website. Users are usually able to access this through a hyperlink on a website. In addition to browsing, you don¡¯t always need to ¡°assent¡± to the agreement.
Scrollwrap agreements: These are extensions of a clickwrap agreement. Before clicking the clickwrap, the consumer needs to scroll down to the terms and conditions.
Are electronic contracts legally binding?
Yes, electronic contracts are legally binding. E-signature laws, such as the Electronic Signature in Global and International Commerce Act (ESIGN Act) and the Uniform Electronic Transactions Act (UETA) make electronic contracts equally enforceable. As with traditional paper signatures, both acts recognize e-Signatures as valid.
A clickwrap agreement and other ¡°standard webpage click-through process¡± agreements are specifically recognized as valid under the UETA. A clickwrap must comply with the law and best practices in order for users to be aware of the terms and conditions and to give their consent. Electronic contracts, including clickwraps, are enforceable when this occurs.
The enforceability of other types of electronic contracts, such as browsewrap and sign-in wrap agreements, is generally low. Users are typically found not to have been informed about what they were agreeing to, so these agreements fail. Courts are not fond of ambiguous agreements that do not require the user¡¯s affirmative consent to the terms. Courts have found that sign-in wraps lack a clear indication that the user agreed to the terms because they use a ¡°dual-purpose¡± button.
How to sign an electronic contract.
It is important to be aware of the different options you have before you choose a signature method for your electronic contracts.
Electronic signatures: True digital signatures are now possible thanks to modern technology. The majority of these solutions require a special sign-in procedure and authentication through a passcode. A user can ¡°sign¡± a document by typing their name into an appropriate field.
Pen and email:?A hard copy of a contract can still be signed, scanned, and emailed online by companies. The method isn¡¯t digital but many companies still use it. However, a signed agreement cannot be tracked, managed, or executed efficiently under this system.
Clickwrap: There is no doubt that clickwrap agreements are the most efficient solution. Users can agree electronically by checking a box, clicking a button, or hitting ¡°I agree.¡± Sophisticated versions trace who consented, when, and what version was signed.
Advantages of electronic contracts.?
Low transaction cost: Compared to traditional contracts, electronic contracts have a lower overall transaction cost. Changes to terms and conditions, especially those affecting a high volume of agreements, are especially challenging. The new terms can, for example, automatically be accepted by all relevant parties as part of a sophisticated clickwrap agreement. The system will then save?employees¡¯ time by capturing important information. Additionally, it reduces the cost of paper, ink, and other contract-related expenses.
Convenient use: A significant advantage of electronic contracts is their ease of use. In addition to being modifiable, they are also more accessible. A dynamic repository can store digital agreements, making them easy to find and use. Business contracts can be automatically assessed across the organization by analyzing data and metrics from contracts kept in the repository.
Efficient: Contracts traditionally require extensive redlining and e-mail correspondence. Signing the document or discussing the remaining details may even require an in-person meeting. There is no need to meet in person when dealing with electronic contracts.
Steps to creating effective electronic contracts.
Managing contracts with vendors, employees, partners, or customers is the process of handling agreements. You need to manage contracts appropriately since they are at the core of your business. You will increase your company¡¯s productivity and reduce costs by using outdated contract management methods. The following steps can be taken to ensure effective contract management:
- Generate: Handle requests easily and manage contracts. Workflows can be easily customized for?your contract process
- Negotiate: With a single platform, you can communicate easily with contracting parties.
- Approve: Approve the contract within a single platform after it has been reviewed by stakeholders.
- Accept: All parties can digitally sign the contract after agreeing how it will be signed.
- Fulfill: You will be able to meet important deadlines and account for renewals once the contract has been approved.
- Analyze: As soon as the deal is completed, you can analyze your contract with a contract management solution. Future business and contracting decisions can be informed by useful metadata.
- Optimize: Analyzing data improves business operations, automates processes, and identifies growth opportunities.
- Review: Keep up with renewal dates by setting up alerts. You can also use contract management solutions to determine whether to renew your contracts based on the performance of your?business.