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How to Ensure Your Electronic Signatures Are Valid
A crucial element of any modern contract: the electronic signature clause. In today's digital age, it's more important than ever to ensure that contracts are not only executed but enforceable, even when signed electronically. That's why including an electronic signature clause in your contracts is an absolute must.
So, what exactly is an electronic signature clause?
Essentially, it's a provision in your contract that acknowledges and validates the use of electronic signatures as a means of signing and executing the agreement. It's important to include this clause in your contracts because electronic signatures are becoming increasingly common and accepted as a legally binding form of signature. Without an electronic signature clause, you run the risk of invalidating the entire contract if one party later claims that one or all of the electronic signatures were not legally binding.
Why are electronic signatures so important?
For one thing, they can save time and money. No more printing out pages of contracts, physically signing them, and then mailing or faxing them back and forth (or getting together in person).. Electronic signatures allow parties to sign contracts from anywhere in the world, with just a few clicks of a button. Electronic signatures for contracts can usually be requested through an online contract signing platform system like DocuSign, Adobe Sign, Agree, or through your company’s CRM (Client Relations Management) software. Sending a contract through a verified online contract platform that requests signatures is useful if parties are in different time zones or if a contract needs to be signed quickly. Additionally, many platforms authenticate signatures and IP addresses so if there is ever an issue regarding authentication you have information on where and when a signature was signed.
Electronic signatures aren't just convenient; they're also legally binding in most cases. In fact, the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA) both provide that electronic signatures are just as valid as traditional signatures in most situations. Of course, there are some exceptions to this rule (for example, certain types of wills and trusts must still be executed with a traditional signature), but for the most part, electronic signatures are perfectly acceptable. However, in order for that electronic signature to be valid you need to have an electronic signature clause that explains that the parties can actually execute the contract in counterparts (i.e. sign the contract separately) and it still amounts to one contract.
Here’s what should be included in your electronic signature clause.
At a minimum, your clause should state that the parties agree to use electronic signatures to sign and execute the contract, and that those signatures will be considered valid and binding. You could also include specific language about the type of electronic signature that will be used (for example, a typed name, a digital signature, or a scanned image of a traditional signature), as well as any requirements for authentication or verification of the signature. And, finally, the parties can sign at different times online in two or more ‘parts’ and the contract will be taken together as a whole and deemed valid.
Including an electronic signature clause in your contracts is absolutely essential in today's digital age. The Legal Paige suggests you put this clause at the very bottom of your contracts, right above the signature lines! Not only can it save time and money, but it can also ensure that your contracts are validly executed and enforceable.
So, the next time you're drafting a contract, don't forget to include an electronic signature clause! Your future self (and your clients) will thank you.
THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. EVERY SITUATION IS DIFFERENT & IS FACT-SPECIFIC. A proper legal analysis is necessary based on your location and contract. Consult an attorney in your home state for advice regarding your contract or specific legal situation.