Editor's Note: Take a look at our featured best practice, Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]
How to Create an E-Contract for Your Business
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For small businesses that interact with clients online, sending an e-contract for them to sign is normal. That’s why you need reliable systems to generate and send contracts. Without one, a manual contract workflow can take away precious time.
With all that time you miss out on, you could be using it to scale your business. Yet, how do you go about creating an e-contract? And how can you make them legally binding?
Below are the essential steps you can take to form your new electronic contract.
How Do You Create an E-Contract Using a Word or Google Doc?
The process of creating an e-contract is typically straightforward. There are several ways you can make the document through your computer and ensure it has an e-signing function.
One way you can create your digital contract is through the everyday tools you may use, such as Microsoft Word or Google Docs. These programs are simple to use because they allow for easy editing.
When creating an e-contract in one of these office tools, here’s what you need to include:
- An offer
- Acceptance of the offer.
- “Consideration” — the exchange of something of value.
- “Mutual assent” — the intent to make the contract binding by its terms.
Once you’ve written your contract, the important thing is to ensure your digital arrangement is legally valid or enforceable. You can obtain an agreement through email or create an e-signature within the document.
Create an E-Signature in Microsoft Word
If you wish to create an e-signature for your document in Microsoft Word, follow these steps:
- Click on the place where you want the signature to appear.
- Click “Insert” > “Signature Line.”
- Then, click on “Microsoft Office Signature Line.”
- In the setup component, you can add the names of those signing the contract and their titles.
- Hit save by clicking “OK,” and the line will appear in your document.
Create an E-Signature in Google Doc
If you choose to create an e-signature within Google, you can follow the steps below:
- Once you’ve written your contract, go to “File” > “eSignature.”
- On the right side panel, click “Add a field to request.”
- Choose “Signature”
- Once you’ve filled in the appropriate information, you can click “Request signature.”
- Enter the email address to send it to the individual you need to sign the contract. Then, click “Send.”
How Do You Create an E-Contract with Contract Management Software?
The other option is to create your e-contract in a contract management system. You might find this process much simpler than creating one on your own, as these systems include various templates.
Plus, they can guide you through the creation process of your digital contract. Most platforms are either free or offer free trials, allowing you to test each to help you make your decision.
Below is a general guide on how to create an e-contract in contract management software:
- Sign up on your chosen platform.
- Create your form and input the appropriate fields.
- Customize your form to edit buttons, fonts, colors, themes, etc.
- Configure your settings and share your service agreement form.
Will My E-Contract Be Legally Binding?
The short answer to this is yes — as long as your contract contains certain elements for it to be legally enforceable. For instance, a contract must have an electronic signature — which is just as legal as a handwritten signature on a traditional contract.
It’s important to note that two laws justify this to be enforceable — the UETA (Uniform Electronic Transactions Act) and ESIGN (Electronic Signatures in Global and National Commerce Act).
These laws confirm that no one can declare a contract invalid because it’s in a digital form.
Additional Requirements to Make Your Contract Legally Binding
To ensure your e-contract is legally valid and enforceable, you must take certain steps. It’s always best to check with your state’s electronic signature laws to see if there are any additional or different requirements.
However, these are the general steps you must follow when making your e-contract enforceable:
- Get consent from parties: You will need to show permission from the parties involved in the contract by having them sign it electronically. In some cases, your state may require you to have a separate agreement to conduct business electronically legally.
- Inform parties about the meaning of their signature: Each party must have a clear indication of what they agree to when signing. That way, the agreement can be legally binding.
- Give parties other options for signing: A paper contract isn’t always necessary. However, some businesses still might want to use it. In that case, the e-signature laws require you to provide this option so they can opt-out of an e-contract.
- Inform parties they can withdraw their consent: The parties involved must be aware that they can withdraw their consent to use electronic contracts and signatures before signing. Additionally, they’ll need a procedure on how to withdraw their consent.
- Keep all copies of your documents: The party that creates the contract must keep digital or hard copies of the signed documents. They also must provide copies to the other party and share how to get them.
One measure you can take to ensure you comply with the law is consulting with an attorney. Businesses that regularly form e-contracts should speak with a lawyer to review their disclosures.
How Do E-Contracts Work?
An e-contract works like a traditional contract — except you can create and store them online. Essentially, you can complete the creation and approval process without using paper or pen.
Digital contracts provide several advantages for your company. Many business owners choose the electronic route for the reasons below.
Drafting a traditional contract takes a longer amount of time than a digital contract. The manual process involves creating the agreement and sending the documents. Or, you might arrange a meeting with the parties involved to discuss the terms and sign them.
This process can be time-consuming, especially if they involve contract negotiations. Yet with an e-contract, you can conduct everything online, even negotiations through video conferencing tools like Zoom.
A paperless contract management system can help you reduce costs associated with printing and mailing. Plus, e-contracts save you on labor costs since you can easily put them together yourself.
Whether you use digital or paper, either type of contract is prone to human error. The only difference is that an e-contract allows quicker fixes since you can make changes directly within your document online.
Plus, digital contracts typically come from stored templates with everything you need to input the essential information. Automating your contracts means you have a lesser chance of creating an error, making a more efficient process.
Creating an E-contract for Your Business Is Easy
Digitizing your contracts can be integral to your business, especially if you’re implementing digital transformation. When you use tools to help you create e-contracts, you streamline your processes, save time and focus on what truly matters in your business operations.
Consider choosing the easier route and customize your e-contract so you can start scaling your business today.
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