10 Ways Electronic Signatures are Changing How Contracts are Signed

With greater availability of the internet, it has been possible to access data quickly. It makes communication happen in an unbelievably fast way. Similar is the case of business as well. Buying or selling things is a matter of a few clicks over the web now. Taking things to the next level, the concept of electronic signatures for contracts has surfaced.

There are a number of questions regarding electronic contracts such as – What is the working model of electronic contracts? When are these used? One can clear all the critical doubts on these aspects upon going through the Uniform Computer Information Act. Anyway, the following abstracts provide a detailed study of electronic contracts, electronic signatures for contracts, etc.

The use of electronic signature brings so many benefits to your business. Here are the top reasons to adopt an electronic signature for your business.

What are Electronic Contracts?

At the very fundamental level, electronic contract signing is an electronic form of legal documents. These legal documents, however, are developed and signed over the web or online. Many companies operate entirely digitally or online. These companies often have to depend upon electronic contracts to make agreements with users or others.

The advantage is that it saves money for both. Just as of the mainstream contracts, electronic contracts are legally authentic. These are entirely enforceable as well. However, in contrast to the usual contracts, electronic contracts are completely web-based. One can use it in various cases, starting from using email programs, authorization for software, etc.

Electronic contracts have also used these days for social media signing-up and facilitating streaming services. Irrespective of the associated permissions, e-signatures for contracts operate very much under the regulations of regular laws for contracts. It also provides equivalent agreements to both business groups and consumers.

How are the Contracts Signed Electronically?

In contrast to the usual paper-based contracts, one needs to sign electronic contracts over the web. Instead of a paper-pen signature, these contracts use electronic forms of signatures. There is no use of ink or any paper, and so these are the electronic signature or simply e-signature. The process of creating and signing electronic contracts is extremely simple. It is a matter of simply putting a click on a button as well.

On some occasions, one has to simply ‘agree’ regarding the authorization of a product or application. It is just about clicking the ‘agree’ button to pay the bill as well. The contract prepares immediately as the concerned user clicks the desired button. There are also the e-sign contracts models available where the user’s name has to be typed on the electronic contract.

One can also complete the tasks by making use of the cryptographic signatures. One may take ‘Public key infrastructure’ as a nice example of a cryptographic signature. It is here to note that Public Key Infrastructure works the same way as of PINs used for ATMs.

Among others, XML based signature is also very much used these days. The best part about the XML based signature is the greater safety it assures. It makes use of digital thumbprints to ensure the safety of a greater level.

There are a number of benefits of replacing a paper-ink signature with an electronic signature. Check out the top 10 uses of electronic signatures!

Legal Concerns of Electronic Signatures for Contracts

Electronic signatures for contracts are legal in most cases. If it falls under the UETA and ESIGN Act, then there is no problem in its acceptance. These laws pay equal worth to the electronic signature to those of the paper-based traditional methods.

When a person goes for electronic signatures for contracts, it holds equivalent worth as of the paper-based methods. However, it is also true that UETA can’t be applied on all occasions. The traditional laws and acts are very much essential in such cases. Specifically, in cases where a copy of the contract may put a harmful effect on the consumer, people prefer traditional methods.

There are various nations and states where UETA is very much applicable. It is thus important to make sure that the rule is applicable in the concerned state you belong to. Additionally, to execute electronic signatures for contracts, both parties should agree upon. Be it about Business-customer, or business-business contracts, acceptance of both the parties is quite essential for a final agreement.

Also Check: An Overview of eIDAS Regulation

When are Electronic Contracts Not Permitted?

There are various occasions when electronic signatures for contracts are not acceptable. It is important to know about such instances. There are instances where an online contract is unacceptable or inapplicable. In all those occasions which hold threats towards the user, such contracts can’t be accepted. For example, the cases of divorce, child adoption, and other sensitive affairs can’t be kept under electronic contracts.

Similarly, the documents of courts are not acceptable in electronic form. Also, the notices served regarding the end of crucial services can’t be done through electronic contracts. Notices served to defaulters are not acceptable in electronic form. Notices meant for evicting a specific property are also impossible through electronic modes.

Apart from these, the notices served regarding the termination of utility services also demand proper paper-based notices. Ultimately, anything in the form of a notice that could affect the safety of people or may bring health concerns should be done traditionally. In most cases, the documents required by legal procedures are also desired to be paper-based.

There is no other way than paper contracts at present when it comes to family laws. A whole range of wills made is essential to be made through papers in modern times. When it comes to sending notices for termination of any utility, there is no other way than paper contracts.

Notices delivered regarding eviction or possessions are also essential to be handled through paper-based ways. Terminating the health or life insurance is also preferable through paper-based methods.

As explained above, it is better to ensure whether the UETA and ESIGN Act comes under your state. In accordance, one can take the decisions on electronic signatures in contracts.

Information Technology Act, 2000 is the law that makes e-signatures valid in India. Let’s get a detailed overview of this Indian e-signature law.

How are Electronic Signatures Changing How Contracts are Signed?

It’s the simplicity that makes electronic signatures for contracts so much useful. The overall swiftness to the procedure is quite impressive for all. Many people are showing their interest in it in modern times. However, it is true at the same time that the law of electronic contract gives scope to use paper documents on certain occasions. Prior to a consumer goes for signing an electronic contract; businesses should serve notice about the availability of paper contracts.

They should also make it clear regarding the penalties applied in case any mistake occurs. They should recommend a date in this regard. It is certainly not legal to force any company for paper-based contracts. In fact, in the digital era, the electronic signatures for contracts seem useful. On such occasions, having people prefer the paper-based option only for security purposes.

Undoubtedly, e-signatures for signing contracts are user-friendly. However, it is also true that it needs trustworthy internet connectivity. It means people who can’t have regular internet connectivity may not find it as an appropriate option. Apart from this, there remains some extent of security issues as well. Though, from a price point of view, the electronic format can be a much suitable option.

Let’s find out how the electronic signatures are changing the ways how contracts are signed.

  • Making things quick

One should not doubt the ability of technology in any way. Just like any other business functionality, it holds the ability to hastening these contract making processes as well. Electronic signatures for contracts facilitate immediate communication and data share. Moreover, it does all these in real-time. This makes it possible for them to connect with partners all around the globe. When the efficiency of finishing formalities grows, naturally, the overall productivity grows. Pending collaborations for such implications are addressed quite smoothly.

All in all, the entire set of works is accomplished in much lesser time than expected. There was a time when the process of contract making used to continue for weeks and even months-long period. It looks quite obvious as the process of distributing documents through different stages would consume a lot of time. Through electronic signatures for contracts, things can be done in a much quicker time. It means less is the obligation associated; quicker can be the process.

  • Convenience

Electronic signatures for a contract are indeed the most convenient option available. Being convenient is the reason behind the growing productivity level of the companies adopting the same. Through cloud computing, it is becoming possible for people to have access to works from anywhere, at any point.

When it comes to making contracts, you can edit and review data at any time. The best part is, you can do all this through your smartphone itself. This means one can complete the formalities until the concerned authority finally acknowledges things. Ultimately, there remains no chance for any kind of delays in it.

  • Safety

One of the primary concerns of using electronic signatures for contracts is it is safe. It’s the safety aspect that makes people get worried while using electronic signatures. People worry speculating whether the documents will be in safe hands within the virtual space. With growing reports of cyber attacks, several people are enquiring about these aspects. In an era of technology, driven by data, safety can be a game-changing factor. Little alternation or modification of the document can change the entire scenario.

Moreover, not a single person is responsible for such unfavorable occasions. In the digital era, there is nothing called inaccessible. Hence, it is important to follow electronic procedures thoroughly to keep track of everything.

Digital Signatures and Electronic Signatures are two similar looking terms but are different from each other. Check out the difference between the two i.e. Digital Signature vs Electronic Signature

  • Future

It’s not just a trend these days to handle everything electronically. The day is imminent; there will be no other option, but to deliver most of the affairs electronically. Modern-day people are easily adopting technological means. Rather, they find the other means of paperwork more complex.

It’s common that a much lesser number of people have time to move from one office to the other for the sake of formalities. On the other hand, electronic means or smartphones can be smoothly handled by the users. The generation that prefers paper-based modes will also start using electronic signatures in a very shorter period.

  • Reliable

Cryptography comes with a safer way of collecting data from one end. Among various others, Public Key Infrastructure can be fantastic standards in this regard. Talking about PKI, it encrypts the electronic contracts and other documents to ensure that these can only be viewed. Things can also be encrypted in a way to ensure that it remains available to the concerned authorized users.

  • For Small Businesses

Technology is constantly varying and the regulations are getting attuned as per it. Sometimes it may complicate, but not on most of the occasions. Most importantly, small businesses are also adopting it. They should contact local attorneys.

There are a number of reasons to adopt electronic signature. Here are the top 10 reasons why you should adopt Electronic Signature for Your business.


The number of companies opting to handle their affairs through virtual modes is growing day by day. It helps them in handling bulk works with less manpower involvement. The cost factor also makes things suitable for them. The best recommendation would be to only keep the last stage of the work in paper form.

Electronic contracts help to shorten the lengthy processes that consume too many papers. With the advent of cloud-based contract management solution, the future is looking quite bright for electronic signatures. Not to mention, it is a simpler, secure, and much cost-effective option.

Making the task simpler, it can be divided into a couple of stages. The first segment would be to save the contracts, and the next stage is the signature phase. These two phases constitute the overall lifecycle of electronic signature. Both these phases will get simpler in the upcoming days. Ultimately, it would be a better idea for the older generation business groups to accustom to the modes of electronic signature for contracts.

Posted by Brian Felix

Leave a Reply