While e-contracts make life easier and business more efficient, you still need to carefully consider how you draft these documents.
Electronic Signatures

What Are the Requirements for an E-Contract? (Don’t Ignore These Conditions)

Will Cannon

Last updated on February 8, 2022

Since the turn of the century, paperless documents have changed how we do contract management. The Electronic Signatures in Global and National Commerce Act (E-Sign Act) was signed into law on June 30, 2000, making e-contracts as valid as their paper counterparts. So what are the requirements for an e-contract? Continue reading to find out! 

What Is An E-Contract?

E-contract stands for “electronic contract.” As the name implies, it is a contract that is created and shared digitally via email, computer programs, or document management software. 

For e-contracts to be legally valid, they have to comply with The Uniform Computer Information Transactions Act (UCITA). Moreover, an e-contract needs to have the basic requirements of a traditional contract—offer, acceptance, capacity, and consideration—to be enforceable. 

With the rise of e-commerce, companies are able to save time, money, and tons of paper by making e-contracts with customers, vendors, and other companies. Paperless transactions have also proved beneficial during the pandemic. 

What Are The Requirements For An E-Contract?

While e-contracts make life easier and business more efficient, you still need to carefully consider how you draft these documents. An electronic contract needs to have the same legal elements as a traditional document. 

The essential elements of a valid contract are:

  1. Offer 

The initial contract includes an offer by one party to exchange something of value for something else that the other party is willing to offer, such as a fee charged for a service. 

  1. Consideration 

What do the parties gain from signing the contract? This factor is known as the ‘consideration’, i.e. what is one party willing to do so that the other party agrees to offer something of value in exchange.  

  1. Acceptance 

After consideration, the other party will either accept or decline the offer, or make a counteroffer (in which case steps 1 and 2 will repeat).

  1. Intention

Intention means that all parties agree to create a valid, enforceable agreement. It also involves matters of consent and coercion. 

  1. Capacity

Finally, all parties must have the legal capacity to sign the contract. For instance, minors usually don’t have the capacity to sign contracts.

Finally, for an e-contract to be ratified, all parties need to create digital signatures. A digital signature can be letters, symbols, or marks; anything that shows your willingness to enter into a contract. (Learn more about electronic signature verification here.) 

When making an offer through a digital contract, communicate the important terms clearly without much legalese and ambiguity. Also, fully disclose all rights and obligations, and express a clear willingness to enter into a binding legal relationship once the offer is accepted.

What Makes An E-Signature Legal?

Whether you type your name, use a symbol, or just make a mark, your e-signature is legal and valid provided:

  • It can be proved that you signed the contract
  • You did so willingly with a clear intent to enter into a legally binding relationship

Some people ‘sign’ e-documents by cropping a picture of their handwritten signature and pasting it onto the documents. It may not be illegal, but this method provides no security, as anyone can cut and paste a picture of your physical signature onto a digital document. 

Meet The Requirements For An E-Contract Using Signaturely

If you frequently use contracts at your company, it helps to have a repository of templates or a management system that helps you create legally binding e-contracts on the fly. 

This is where Signaturely comes in. They offer a built-in library of custom templates for all kinds of business contracts. Whether you want to start a partnership, hire people, or enter into a service agreement, their software has you covered.

Of course, using Signaturely doesn’t mean you can fire your lawyer. But you will have an easy-to-use document management system on your hands to help you create contracts that are legally binding, both in their format and their transmission. 

service agreement template

So how does Signaturely help you meet the requirements for an e-contract?

For one thing, the software features built-in compliance with all international laws governing contracts. You can also check if an e-contract you create complies with local laws. 

Once a contract is created, you can send it safely to all concerned parties via 256-bit encryption and AATl compliance.

Encryption or cryptography helps ensure the safety of the documents that you share online so that only authorized users can view and edit them. Encryption ‘scrambles’ the information when you send an e-contract, and the recipient can unscramble it on their end via a decryption key. 

Signaturely also helps you easily locate and access documents in real-time. This allows you to save time and paper while signing, tracking, and storing your documents. 

employment contract agreement template
Signaturely also helps you easily locate and access documents in real-time. This allows you to save time and paper while signing, tracking, and storing your documents.

How to Create a Contract Online for Free with Signaturely

Part of what makes Signaturely great is its simplicity. The user interface is intuitive, making it fast and easy to create documents. 

While it’s a professional tool with dozens of excellent features, Signaturely doesn’t overwhelm you with commands and controls that you don’t actually need. 

Here’s how you create a free contract with Signaturely:

Step 1 – Sign Up

You can create a free or paid account with Signaturely. Even the free version has several e-contract templates to choose from, along with three signature requests per month.

Step 2 – Go to ‘Contract Templates’

Click ‘contract templates’, and then search for a template for the kind of digital contract you want to create. Signaturely has more than 40 templates to choose from, all reviewed by legal experts. 

Step 3 – Download the Document

Once you choose a specific template, you can download it as a Doc or PDF for editing. 

Step 4 – Send It!

Once you enter the necessary details, you can send the contract digitally to all relevant parties within seconds. 

They will receive an email with a link they can use to open the contract and sign it with an electronic signature, on any device.

Signaturely is a simple and effective document signing tool made to help you upload documents and collect electronic signatures from any device.

What Are The Requirements For An E-Contract? – Related Questions 

If you’re still pondering over what are the requirements for an e-contract, here are answers to some additional questions to help you out!

What are the benefits of an e-contract?

The most obvious benefit of an e-contract is the time and money saved. You don’t have to post and store mountains of hard copies at each stage of the deal. This frees up time in the office to work on more productive tasks. 

Considering the ever-increasing focus on environmental impact, paperless documents also help you reduce wastage in the workplace. And with the pandemic still looming large, digital contracts help you stay safe while managing business as usual. 

With cloud storage, all involved parties can locate, access, and review documents in real-time. There is greater transparency since you can see when edits are made, and who made them. And with digital security protocols, contracts are kept safe from hackers. 

Are electronic contracts legally binding?

Several federal and international laws have made it legal to conduct official business via electronic contracts. These laws include the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA). 

Even the Uniform Commercial Code (UCC), the primary law governing the sale of goods in the United States, accepts electronic contracts.

Electronic transactions also have to meet the requirements of the Statute of Frauds under UETA for the sale of goods over $500.

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