Tips for executing agreements electronically

Electronic execution of agreements is quickly becoming more commonplace in most businesses.

But how can you obtain authorized e-signatures and be sure it is a sound agreement?

Contract formation is generally governed by state law rules, and the requirements are similar for a virtually executed contract:

  • The agreement must state that the customer consents to enter into the agreement electronically.
  • There has to be a way to identify the individual electronically signing the agreement.
  • The process for obtaining the other party’s signature must indicate their promise to enter into the agreement. This is called “actual expression.”
  • The signer must have the authority to execute and deliver the agreement on the customer’s behalf.

 

When you are making an agreement with an individual, it’s relatively easy to confirm that the person had the authority to enter into the agreement.

However, when you’re making an agreement with another business, it can be a little dicey. In such a situation, when someone on the other side clicks the “I agree” button, it might be unclear who actually did the clicking. Further, it might be unclear whether the e-signer is authorized to make the agreement on the part of the other business in the first place.

To protect yourself and end up with a legally executed agreement, make sure that the agreement is e-signed by someone who is authorized to do so and that the signer is truly agreeing to enter into the terms contained in the contract. Either include procedures to confirm the identity of the person clicking “I agree” or use a third-party service to authenticate that person’s identity.

Consult a business attorney to confirm that you are managing your electronic agreements in a way that makes them enforceable.

 

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