My partners and I just launched a business. Most of our clients are overseas. We're thinking of just using digital contracts with electronic signatures. Is this a good idea?
Congratulations on the launch of your business! Many businesses today are trying to have paperless offices, which means that they’re looking to use digital contracts with electronic signatures.
There are benefits to going this route, but it’s important to understand exactly what you’re getting yourself into before you take the dive.
One source defines e-signature as “data in electronic form, which is logically associated with other data in electronic form and which is used by the signatory to sign. This type of signature provides the same legal standing as a handwritten signature as long as it adheres to the requirements of the specific regulation it was created under.”
So, e-signatures – as they are often called – have the same legal standing as a handwritten signature. This means that your contracts will be legal and enforceable.
In fact, electronic signatures are now commonly used in legal dealings, private agreements, business transactions and even as part of government documents.
E-signatures should not be confused with a digital signature, which refers to a cryptographic mechanism that implements electronic signatures.
There are many benefits to incorporating the use of electronic signatures into your business. The first and most obvious benefit is convenience. E-signatures are simple and easy to incorporate into your documents. There are many online solutions available. All you have to do is upload the document, declare the recipients and signers, and then deliver the secure link to the recipients. The recipients sign the document, and the process is complete.
Documents can be signed by multiple parties no matter where in the world they are, and without ever having to leave their office.
Another benefit, which you may find hard to believe, is that electronic signatures are actually safer and more secure than traditional paper documents. In addition to the signature itself, these documents contain traceable information regarding who signed the document, when it was signed and where it was signed. This is information that you can’t get with a traditional paper document.
E-signatures also save time. There's no need to wait for each party to print, sign and scan the document. Everyone can sign within just a few minutes. This means that time-sensitive documents and contracts can be completed right away, rather than waiting several days for everyone to jump on board.
Businesses also save on costs when they incorporate e-signatures into their business operations. You save on paper, but you potentially save on postage, mail supplies and time. It’s also a more environmentally-friendly option, as you won’t be wasting paper.
It’s natural to be apprehensive about using e-signatures and digital contracts because you’re so used to doing things the traditional way. However, electronic signatures are treated in the same way handwritten signatures are treated. If clients give their e-signature and breach the contract, you have legal recourse.
Of course, I’m not a lawyer, nor am I giving you legal advice. You’ll want to speak with your lawyer about your plans before moving forward.