EContracts: Are They Future Or Failure?
There is no doubt that the digital age has changed the way we do business. One of the most significant changes has been how contracts are created and exchanged. With the rise of econtracts, businesses have found a new and more efficient way to conduct transactions. However, some still believe that econtracts are nothing more than a passing trend and will eventually fail. So, which is it: future or failure?
What is an Econtract?
An E-contract, also known as an electronic or online contract, is a legally binding agreement between two or more parties that is formed and executed entirely online. Unlike a traditional paper contract, which both parties must physically sign, an econtract can be signed electronically using a digital signature.
How to create eContracts
Creating an eContract usually starts with the same process as creating a paper contract. The parties involved will discuss the terms of the agreement and negotiate any changes. Once the terms are agreed upon, they will be reduced to writing in the form of an eContract. The eContract can be signed electronically by all parties using a digital signature. Once signed, the eContract becomes legally binding and enforceable in the same way as a paper contract.
Why do more and more businesses choose eContracts instead of paper contracts in 2022?
In recent years, there has been a shift towards using electronic contracts, or “eContracting,” instead of paper contracts. This trend is likely to continue in the coming years for several reasons.
First, eContracts are more efficient and convenient than paper contracts. They can be signed and executed quickly and easily without needing paper copies or physical signatures.
Second, eContracts are more secure than paper contracts. They are less likely to be lost or stolen and can be password-protected to prevent unauthorized access.
Finally, eContracts are more environmentally friendly than paper contracts. They eliminate the need for paper and ink, which can save trees and reduce pollution. For all these reasons, more businesses will likely choose to use eContracts instead of paper contracts in the coming years.
Types of eContracts
When looking at eContracts, it is essential to understand that there are different types. The three most common types of eContracts are:
- Clickwrap Contracts
A clickwrap contract is a legal agreement between two parties that is manifest by clicking on a button or taking some other affirmative action. The clicking or other action signifies the party’s consent to be bound by the terms of the agreement.
For a clickwrap contract to be enforceable, there must be evidence that the party clicked or took the affirmative action and that they had notice of the terms of the agreement before doing so.
Additionally, the terms of the agreement must be unambiguous and not subject to change without notice. Clickwrap contracts are commonly used for online transactions, software licenses, and other agreements where it is not practical or possible to have the parties physically sign a contract.
They are also sometimes used when it is essential to ensure that the party has read and agreed to the highlighted terms of the agreement, such as in end-user license agreements.
While clickwrap contracts are generally enforceable, they have some potential risks. For example, if the terms of the agreement are unclear or subject to change without notice, it may be difficult to enforce them. Additionally, suppose the clicking or other affirmative action is not documented correctly. In that case, there may be issues with proving that the party agreed to the terms of the agreement.
- Browsewrap Contracts
In addition, courts have held that browsewrap agreements are more likely to be enforced if they contain a clear statement that the use of the site constitutes acceptance of the terms.
- Shrinkwrap contracts
Last but not least on the list of the most common e-contracts are shrinkwrap contracts. You can find these when you purchase or download software off the internet. They’re also called click-through agreements because, well, all you have to do is click “I agree” to continue with the process of downloading or buying the product.
Shrinkwrap agreements are generally pretty short, easy to read, and understandable. But that doesn’t mean they don’t have their downfalls. One big problem is that if any changes are made to the terms of service after you’ve already agreed to them, you’re still bound by those terms — even if you never saw the updated version. That means companies can make changes without your knowledge, and you’d still be held accountable.
Moreover, because these types of e-contracts are so short, there’s not a lot of room for negotiation. You have to agree to the terms as is or find another software that better meets your needs.
Advantages and disadvantages of e contract
While e contracts can offer several advantages, there are also some potential risks. So, when choosing the right e-contract platform for your business, it’s essential to consider both the advantages and disadvantages.
Advantages of e-contract
- Ease of formation, access and transfer
The first and foremost advantage of e-contract is the ease with which it can be created, accessed, and transferred. Unlike paper contracts, which need to be physically signed by both parties, e-contracts can be easily created and shared electronically. This makes them more convenient and efficient, especially for international businesses.
- Cost savings
Another advantage of e-contracts is that they can help businesses save on costs. For instance, businesses can avoid the cost of printing and mailing paper contracts. In addition, e-contracts can help businesses save on storage costs since they take up less space than paper contracts.
- Improved security
E-contracts also offer improved security compared to paper contracts. This is because electronic signatures are more difficult to forge than handwritten signatures. Also, e-contracts can be password protected to improve security further.
- Improved document accuracy
Accuracy is another advantage of e-contracts. This is because it is easier to catch errors in electronic documents than in paper contracts. So businesses can use software to check for errors in e-contracts before they are finalized automatically.
- Fast business operations
Lastly, e-contracts can help businesses operate faster. This is because businesses can create and sign e-contracts quickly and easily. In addition, businesses can use electronic signatures to further speed up the contract signing process.
Disadvantages of e contracts
- Dependency on software
One disadvantage of e-contracts is that they depend on software. This means that businesses need access to reliable and compatible software to create and sign e-contracts. Besides, businesses need to ensure that their employees are trained on properly using the software.
- Risk of insufficient storage
Another disadvantage of e-contracts is the risk of insufficient storage. This is because businesses need to ensure that they have enough storage space to save all their electronic contracts. Additionally, businesses need to back up their electronic contracts regularly to avoid losing them.
- Risk of an e-contract platform crash
Another risk of using e-contracts is the possibility of an e-contract platform crash. This can happen if the software used to create and sign e-contracts is not compatible with the business’s computers or if there are power outages.
Are Econtracts the future or failure? Well, it all depends on your perspective. If you are okay with the terms and conditions, then they can be pretty beneficial for you. On the other hand, if you want more control over the terms, you might want to consider another option. Therefore, consider the advantages and disadvantages when choosing a reliable e-contract platform for your business. By doing so, you can make the best decision for your business.