Blog Post

The Ultimate Guide to Online Contracts in 2024

February 19, 2024

Every year, there seems to be yet another online experience you can now access. You can order food, ride roller coasters, visit art museums, and even try on clothes virtually. Technology is opening doors, creating more accessible experiences for everyone.

The legal field is also adopting more online experiences, creating more efficient and cost-effective options for clients globally. One way legal technology has improved legal processes is through online contracts.

Learn how online contracts benefit businesses and the five steps to establishing an online contract workflow.

Key Takeaways:

  • Online contracts are just like traditional contracts, but everyone reads and signs them virtually.
  • Online contracts are more efficient, accessible, secure, and flexible.
  • Create a clear online contract workflow to keep your contracts secure and organized.

Understanding Online Legal Contracts

Online legal contracts, also known as electronic contracts or e-contracts, are agreements created, signed, and stored electronically. These contracts are legally binding and serve the same purpose as traditional paper contracts.

You can use online legal contracts for most of your regular needs, including employment contracts, service agreements, non-disclosure agreements (NDAs), terms of service, and more.

Electronic Contracts vs. Traditional Contracts

Image from DottedSign

Advantages of an Online Contract Agreement

Why should you consider switching to online legal contracts?

  • Efficiency: Online legal contracts streamline the contract creation process. They eliminate the need for printing, scanning, and physical signatures. This results in significant time and cost savings for everyone.
  • Accessibility: With online contracts, parties can access and review documents from anywhere with an internet connection. This accessibility promotes collaboration and allows for faster decision-making.
  • Security: A quality online contract platform offers advanced security features such as encryption and authentication. These features ensure the contract’s integrity and confidentiality. You’re less likely to lose a digital file than a paper contract. Additionally, digital audit trails record contract activities and revisions.
  • Flexibility: Online legal contracts accommodate several different signing methods, offering greater flexibility for you and the other parties. Some of these include electronic signatures, digital signatures, and clickwrap agreements.

5 Steps to Create Online Legal Contracts

Follow these five steps to create online legal contracts that are both legally binding and efficient to create and manage.

Step 1. Choose the Right Platform

Online contracts are more than a PDF you draft on Word and send to clients. For them to be legally binding and secure, you want to work with a legal contract platform.

Look for a platform that offers features tailored to your specific needs. Some features to consider include:

You will also want to look at services offered along with contract creation. For example, online contracts may require steps traditional contracts don’t need, such as digital storage and management.

Step 2. Draft Clear and Concise Terms

Once you have a platform, you can begin drafting contracts. Follow the same rules you would with traditional contracts. You’ll want the contract to clearly define each party’s rights, obligations, and responsibilities. Use plain language whenever possible to reduce the chances of a misunderstanding.

Your contract may include provisions. Be sure to clearly outline any provisions related to payment terms, delivery schedules, dispute resolution mechanisms, confidentiality obligations, and termination clauses.

The contract’s body won’t vary much from your traditional contract. You’ll notice a difference, however, when you collect a signature as that’s the main differentiating factor between the two contracts.

What should be in every contract

Image from ProjectCubicle

Step 3: Receive an Online Signature

When a person comes to an office or notary to sign a document, you know exactly who it is, and that they’re aware of what they’re signing.

With digital contracts, you don’t see the person signing the contract. So you need a few extra legal steps to ensure the other parties sign it fully aware of what they’re committing to.

Several methods for signing contracts electronically are legal and secure:

  • Electronic Signatures: Electronic signatures, which can be as simple as typing your name or using a stylus or touchscreen, are widely accepted as legally binding in most jurisdictions. They offer a convenient way to sign documents without needing physical presence.
  • Digital Signatures: Digital signatures use cryptographic techniques to verify the authenticity and integrity of a signed document. They provide a higher level of security than electronic signatures, and legal professionals often use them for more sensitive or high-value transactions.
  • Clickwrap Agreements: Legal professionals commonly use clickwrap agreements for online transactions. Clickwrap agreements require users to click a button or checkbox to indicate their acceptance of the contract term. While it’s less formal than traditional signatures, clickwrap agreements are still legally enforceable in most cases.

Step 4: Manage and Enforce Your Contract

The contract lifecycle lasts beyond signing the contract. It also includes storing it where you can find it again.

Use a centralized contract management system to securely store and organize all your online contracts. This ensures easy access to contract documents and supports compliance monitoring and reporting.

Set automated reminders for crucial contract milestones, such as renewal dates, payment deadlines, and performance obligations. This helps prevent oversights and ensures timely action on contract-related tasks.

As the contract goes into effect, you will want to ensure all parties hold up their end of the contract.

Include provisions in the contract outlining procedures for resolving disputes or disagreements during the agreement term.

Step 5: Regularly Review and Updates

Your contract management tools should include contract data analytics to help you monitor your contracts.

Periodically review and update your online contracts to reflect changes in your business operations, legal requirements, or industry standards. This ensures that your contracts remain relevant and enforceable over time.

The best way to handle contract review is by creating a workflow that automates updates, sends notifications, and manages past contracts.

Time to Move Your Legal Contracts Online

Embracing legal technology will drastically change how you operate. You’ll notice more productivity, greater efficiency, and improved security.

Exigent can help you transition into the legal digital transformation. Our legal services and AI-powered tools level up your operations, saving you hours of tedious manual contract work.

Are you interested in adding more time back into your schedule while removing the stress of traditional contract management?

Contact us to learn more about our online contract management services.

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About the Author:

Exigent is an Alternative Legal Services Provider (ALSP) breaking industry boundaries and raising the bar for data-driven decision-making. With a powerful combination of technology, legal expertise, and business acumen, Exigent creates expert solutions that drive better legal and business outcomes for law firms and corporations.

Exigent delivers scale, expertise, and insights that generate bigger returns for CLM – Contract Lifecycle Management, Legal Spend Management, e-Billing, Due Diligence, Document Review, eDiscovery and Litigation Support, Commercial Services, Regulatory & Compliance, Outsourced Legal Administration, and Legal Tech Design.

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