E-contracts and Traditional Contracts
It’s essential to understand the difference between a contract and an e-contract as e-contracts continue to grow in popularity among modern businesses due to their advantages.
More and more companies are using e-contracts as technology continues to revolutionize the business world. If you want to keep up with the demands of today’s market, it’s crucial to understand the difference between e-contracts and traditional contracts. Electronic agreements will soon supplant their traditional counterpart because of their efficiency.
What’s the difference between an e-contract and a normal contract?
Today, it’s necessary to understand the difference between smart and traditional contracts, as many businesses are beginning to switch to e-contracts. Electronic agreements play a crucial role in any modern business. They allow companies to develop and meet the increasing needs of consumers rapidly. It looks like paper documents will be replaced by virtual ones as more and more companies realize their benefits in the near future.
When using paper contracts, you must meet with your contracting party in person to draft, negotiate, and finalize a legally-binding agreement. This may involve meeting several times to work the terms of a deal in a way that best suits both companies. When the finalized version is approved, you will then have to meet again to sign the document. This is a lengthy process and often requires a lot of effort from both parties.
Electronic agreements, on the other hand, are electronic documents that serve as legally binding contracts. In other words, they’re similar to traditional agreements except, the whole process is optimized on a digital program. Everything in the contract’s lifecycle is done online, including creation, negotiation, signing, and monitoring. For this reason, e-contracts are quickly gaining popularity as more businesses discover their efficiency and ease of use.
Traditional contract vs e-contract
Both smart contracts and traditional contracts are legally valid. However, the traditional contract creation and management process could use issues for your business down the line, such as compliance issues, litigations, errors, decreased productivity, and wasted expenses.
For these reasons, many companies are making the switch to electronic contracts. E-contracts boast their own set of benefits that make them far more efficient when compared to traditional paper agreements.
Here’s a closer look at the nature of traditional and e-contracts:
Availability of Templates
An e-contract management system gives you the option to create your document using a variety of pre-made templates that can be customized to suit your specific needs. This is much quicker than traditional contract creation, where you have to draft your document from scratch, which can take days or even weeks.
Ease of Use
An e-contract system is easy to implement as it offers a user-friendly interface that your employees can quickly learn. Plus, the formation of an e-contract is automated, allowing you to create agreements with ease. On the other hand, the traditional method can be confusing as your team has to complete every stage of the management process manually. This can cause bottlenecks and increase the time it takes for your company to close deals.
Number of Errors
It’s easy to overlook mistakes when creating agreements traditionally because they are typically written on a word processing software that doesn’t check for compliance issues and errors in the terms and conditions. By utilizing smart contracts, you can safeguard against errors because their platform ensures that you don’t leave out any essential agreement elements.
Paper documents are susceptible to loss, theft, and forgery, all of which can hurt your business and its reputation. A contract management platform ensures that your data is encrypted on a secure, cloud-based platform that prevents your document from getting lost, tampered with, or stolen.
Traditional contracts are far more expensive to create than e-contracts. Paper agreements require you to pay for increased labor, paper, printing, and other office supplies, which add up over time. With a digital platform, you typically only have to purchase the software, which saves you from paying for all the expenses of traditional agreements.
Challenges of e-contract
There are a few problems that you must consider before implementing a virtual contract platform. Regardless of the challenges when using electronic contracts, they are still far more beneficial than pen and paper documents.
Here are a few of the problems of e-contracts:
Reliant on web access and computer system
To access your document, you must use a computer or have access to the internet. This means that if you don’t have wifi or your system crashes, you may not be able to view or edit a document when you need it the most.
Use of third-party software
Some self-sufficient companies may not want to be reliant on another business for their daily operations. Since contract management software is often purchased through a third-party, businesses concerned about security and confidentiality may be hesitant to use it for their sensitive documents.
Some contract software providers place a cap on how much storage you can use on their server. This may pose a problem to large-scale corporations that deal with many contract documents at any given time.
Some clients may be against using digital contracts. Maybe they still prefer paper contracts and are concerned with putting their private information on a web-based platform, or they may not have the software required on their end to access and sign the document. Whatever the case is, this could lead to complications during business dealings.
Advantages of e-contract
Once you understand the difference between contract and e-contract, you will realize e-contracts are more efficient. Using contract management software can help whittle away all of the challenges related to formation, drafting, negotiating, and signing an e-contract. These software platforms offer you one secure spot to create, edit, and access your agreement documents, anytime, anywhere.
These are the benefits of using a contract management system when dealing with e-contracts:
- Automated creation
- Ease of use
- Less expensive
- Higher accuracy
- More efficient
- Increased security