Electronic Contracts Can Boost the Health of Your Business

By August 13, 2020resources

Many businesses are concerned about the time it takes to get business deals in place and although many businesses have come to accept electronic signature they still may be a little hesitant to change their own business practices to provide electronic contracts to other parties for signature.

Your business could benefit from the speed and consistency of contracting electronically in a world where repeatability could be the difference between 10% and 50% of your deals closing faster, with less risk.  2020 is here and electronic contracts have been proven to be valid!

Back in the Day:

Historically we have agreed to terms in a contract by verbal agreement or in writing where each party makes a mark on the paper indicating agreement (now known as a signature).

To begin with, to be legally binding, contracts are comprised of the following: 1) agreement by parties to enter into a contract, expressed by a valid offer and acceptance; 2) adequate consideration; 3) capacity; and 4) legality.

These contract rules came directly from federal and state Statute and were enforced through case law.

We have evolved and so have the rules:

In addition to basic elements of a contract, to be a legally enforceable, an electronically signed contract must include the agreement of the parties to conduct the transaction using electronic means. This has been supported both by the Uniform Electronic Transactions Act (UETA) and The Electronic Signatures in Global and National Commerce Act (E-Sign Act) and upheld by case law.

There are 2 Acts that define these additional requirements:

The ESIGN Act is a federal act, which means it affects people who do business online in all 50 states. The UETA, meanwhile, has been adopted on a state-by-state basis. Individual states have the option to adopt or reject the guidelines presented in the act. In most cases, where there is a conflict between the ESIGN Act and the UETA, the state law will govern. However, the ESIGN Act specifies that while state laws do not have to conform exactly to the federal law, they must provide equivalent protection for electronic contracts and electronic signatures.

At the present time, the UETA has been adopted by 47 states, along with the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Washington, Illinois, and New York have not adopted the UETA, however similar legislation that governs how electronic transactions are handled has been enacted in each of these three states

One of the key areas where the UETA differentiates itself from the ESIGN Act has to do with the notices that both parties must agree to before entering into an electronic transaction. According to the UETA guidelines, the type of agreement that must be made in order for an e-signature to be legally valid varies depending on the context and the circumstances. This gives companies latitude when conducting commercial transactions online. The UETA expressly provides that the party’s agreement is to be found from all circumstances, including the parties’ conduct. Terms like “automatic transaction” and “computer program” are defined broadly to give companies leeway in the ways they choose to do business without sacrificing consumer protections.

Welcome to the electronic age of contracting, improving the health of your business!

 

 

Shannon Leonard

Author Shannon Leonard

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