Online Contract Signing for Businesses: How Does It Work?

Online Contract Signing for Businesses: How Does It Work?

It wasn’t too long ago that to sign a contract, you had to print it out, sign it by hand, and mail it off. Nowadays, online contract signing has become prevalent as more businesses go paperless. Good thing that there are many ways for you to sign contracts via the internet.

Let’s take a closer look at the basics of online contract signing and how it can benefit your business.

 

Table of Contents

 

What Is an Online Contract?

An online contract is a legal agreement between two or more parties that is executed via the internet. This type of contract typically uses a combination of text, images, and click-through actions to create a binding agreement. Online contracts are drafted and accessed through web-based software or apps.

Unparalleled Convenience

The difference between printed and online contracts is that the latter are far more convenient to use. Since digital contracts don’t need to be scanned or printed out, they are faster to create and sign, even with multiple signatories.

While online contracts are growing in popularity, some argue that these agreements are not as enforceable as traditional paper agreements. However, an online contract is as legally binding as its paper counterpart.

Legally Valid

In 2000, the federal government took a significant step forward in recognizing the validity of online contracts by passing the Electronic Signatures in Global and National Commerce Act, also known as the E-Sign Act. This law makes it clear that in most instances, online contracts and electronic signatures are as legally binding as their traditional counterparts.

As a result, businesses and consumers alike can now enter into online contracts with confidence, knowing that their rights and obligations will be recognized by law. The E-Sign Act has a part in facilitating the growth of e-commerce, and it is likely to continue to play a vital role in the years to come.

How to Sign Contracts Online

Online contracts follow the same basic format as traditional paper agreements, but they are created on a computer and sent via email or through a contract management platform. The signer then sends it back to you with an electronic signature to show agreement with the terms of your contract.

Signing contracts online requires creating and using electronic signatures. An esignature is a digital representation of a handwritten signature that can be used to authenticate digital documents.

Use an online platform or web application

Here are the steps to signing an online contract with an esignature app or contract management platform. Let’s take Fill as an example:

  1. Open a web browser, go to Fill, and create a free account.
  2. Once you have an account, upload your document. A faster option is to customize a contract template from Fill’s gallery.
  3. Add fields for the other party’s name, address, and signature.
  4. After you’ve added all the necessary information, click Save.
  5. You can now send a signature request via email. The signer will receive an email with a link to the contract.
  6. They can review the contract and sign it online. You will get a notification when a signatory has viewed and signed the online contract.

Create a unique electronic signature

Thanks to technology, creating an electronic signature is pretty straightforward. Open your preferred esignature app or service and choose from one of these methods:

  • typing your name or initials
  • drawing with a mouse, digital pen, or trackpad
  • uploading an image of your handwritten signature
  • using a biometric device such as a fingerprint scanner.

Track the progress of online contracts

Contract management platforms like Fill offer a variety of features, including the ability to track the progress of online contracts. You can see who has viewed the contract, when they viewed it, and when they signed it. This information can help ensure that all parties know the agreement and agree to abide by its terms.

You can also use contract management software to send reminders and notifications to the other party as the contract progresses. This can help to keep everyone on track and avoid any misunderstandings.

Essential Terms in an Online Contract

1. Offer

This is the first part of a contract. It is an offer by one party to another to enter into a contract. The agreement must be unambiguous and straightforward so that the other party understands what they are consenting to.

2. Acceptance

This is the part of the contract where the other party expresses their agreement to the terms of the offer. The acceptance must be unequivocal and unconditional. Otherwise, it will be considered a counteroffer.

For instance, if the other party adds new contract terms that were not originally included in the offer, this is considered a counteroffer. When this happens, you would need to amend the contract to match the new terms.

3. Consideration

This is what each party to the contract agrees to give or do in exchange for the other party’s promise. For example, in an employment contract, the employer agrees to pay the employee a salary in exchange for the employee’s promise to work.

When to Use Esignatures for Business Contracts

Online sales contracts

Esignatures can be used to finalize deals between a buyer and a seller. For instance, an online contract outlines the terms of the sale for an item sold on an e-commerce platform.

When two parties enter into an online sales contract, the contract must contain these details:

  • description of the goods or services
  • price and payment structure
  • delivery details
  • warranties
  • return process for damaged or defective goods
  • rights of either party to terminate the contract
  • provisions regarding confidentiality and liability.

Employment contracts

Are you hiring someone for a remote team? An esignature can be used for an employment contract, even if the employer and candidate never meet in person. They can sign the contract electronically using tools like Fill.

Each party will have a copy that they can access and view at any time. An online employment contract typically includes the following:

  • key information about the employee (e.g., name and contact information)
  • employer’s information (e.g., company name, business address, and contact information)
  • job title and description
  • start date and hours of work per week
  • salary, including any commission or benefits
  • disciplinary procedures
  • grounds for termination

Business partnership agreements

If you are forming a business with another person, you can use an online contract to sign a partnership agreement. With an online contract, both parties can sign the partnership agreement even if they are in different locations.

An online business partnership agreement should include the following:

  • names and contact information of the business partners
  • nature of the partnership and the business to be conducted
  • percentage or ownership stake of each partner

Non-disclosure agreements (NDAs)

If you are sharing sensitive information with another party, it is best to ask them to sign a non-disclosure agreement (NDA). Esignatures legally obligate the other party to keep the information confidential.

An NDA must clearly state:

  • the confidential information that is being shared
  • the party who will keep the information confidential (i.e. the receiving party)
  • the duration of the non-disclosure agreement
  • the consequences for breaching the agreement

Loan agreements

Whether taking out a bank loan or borrowing money from another institution, it’s vital to have a contract. An esignature can also be used to sign a loan agreement. The loan agreement outlines the terms of the loan, including the following:

  • information about the borrower (e.g., name and contact information)
  • information of the lender (e.g., name, contact information, and account number)
  • amount borrowed
  • interest rate (if any)
  • repayment schedule
  • payment method
  • consequences of defaulting on the loan

An esignature can be used to sign all of these documents and more, as long as both parties agree to the contract terms.

Collect and Send Signed Contracts Online With Fill

Collect and Send Signed Contracts Online With Fill

Fill makes it easy to send contracts online and collect electronic signatures from all parties. This feature-rich app lets you create legally binding digital signatures with just a few clicks.

Instead of starting from scratch, you can choose from a wide range of templates suitable for various industries. Avail of custom branding and other advanced features when you sign up for a Pro plan.

The best part? All of these are secured with 256-bit encryption and signer ID verification for your peace of mind.

Get started for free today to see how Fill can transform your online contract management.

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