5 Reasons It’s Risky to Negotiate Contracts by Email
Intellectually, we all know that email security is a problem. After all, earlier this year, it was reported that information from 550 million Yahoo accounts was stolen in 2014. Yet the vast majority of companies continue to trust email and use it as a primary tool to negotiate contracts.
Is an email contract legally binding?
You may be wondering, “does an email count as a contract?” The short answer is yes. Emails are considered legally binding by the courts. As with any valid contract, for an email to be a legally binding agreement, consideration, and a meeting of the minds. Even though the language used in email agreements may seem casual, and there’s never incorporation of key terms, the parties can still be held accountable for what they informally negotiate in conversations via email. However, regardless of their legality, there are significant security risks when entering an agreement using email.
How do you sign an email contract?
There’s a common misconception that you can’t be bound to an agreement if you haven’t signed a document. However, recent cases have upheld that an email is a legally binding contract if it’s authenticated through the online signature of the guarantor. For example, if a person puts their name in an email to show that they’re taking responsibility for its contents, it will be considered an email contract signature. Therefore, they will be bound to whatever they stated or agreed to.
Signing an email contract can be a daunting task, especially if you’ve never done it before. Fortunately, the process is relatively straightforward and can be completed with ease. Knowing how to sign a contract by email allows you to take advantage of the convenience of digital contracts without sacrificing security.
To sign an email contract, open the document in PDF format and use your mouse or finger to draw your signature. You can also upload an image file with your electronic signature if desired. Once you have completed this step, save the document on your computer and attach it back to the original email as well as any other required documents mentioned in the body of the text. Finally, click “Send” and wait for confirmation that both parties have agreed upon all terms within the contract.
Signing a contract by email can be an effective and efficient way to execute agreements. If you are considering signing a contract via email, it’s important to understand the best practices and legal implications of doing so.
To make sure that your email signature is legally binding, you should include language in the body of the email that states both parties agree to the terms of the agreement and will be bound by its provisions. You should also make sure that you have consent from all involved parties before sending out any documents for signature. When sending out emails for signature, use an online platform or service like Parley Pro which offers secure electronic signatures with legal compliance features built-in. This ensures that your electronic signatures are recognized in court and offer additional protection against fraud or identity theft. After receiving a signed document, save it securely as well as print out a paper copy for safekeeping.
What gets emailed? Strategies, business plans, financial information and comments to specific contractual clauses. When there’s an email security breach, this confidential data can become public information.
Security during contracting
Even though an email is a legally binding contract, it should not be your preferred way to enter formal business arrangements. Emails lack the security measures that other forms of virtual contracts offer to their users.
Instead of using emails to create contracts, here are some essential security measures to take to uphold the privacy of your information:
- Store your documents in a central repository
Email contracts are often saved and stored in shared folders across multiple locations, or even worse, kept directly in an inbox. However, you can take control of your contract security management when you store your documents in a password-protected and cloud-based repository. Not only does a centralized repository offer optimized organization, but it also keeps your information safe from malicious individuals.
- Implement role-based security to your contracts
When you utilize a secure repository to store your contracts instead of email, you can create role-based permissions for greater security. This feature lets someone read or edit certain agreements but denies them access to one’s that are out of their assigned duties. Additionally, it prevents prying eyes from seeing private contract details.
- Ensure that your data is encrypted
One of the most crucial ways to protect your business agreements is to encrypt all of your data, which is something you can’t do with emails. To ensure maximum privacy, you will want to ensure that all your information is encrypted both at rest and in transit using the latest technology.
- Utilize eSignatures
As mentioned earlier, email agreements don’t technically need to be formally signed since your name takes on the role of a signature. When you utilize a platform with eSignature capabilities you can be sure that you don’t accidentally bind yourself to an arrangement. Additionally, eSignatures boast their own set of security features. They keep a record of who, when, and where someone signed an agreement to ensure authenticity.
5 very real dangers of using email in the contracting process
Here are five very real dangers of using email in the contracting process.
1. Data Breaches Can and Do Compromise Email Accounts
In 2014, Sony Pictures Entertainment’s computer system was hacked, compromising emails, personal information, salary information and entire unreleased movies. The hacking exposed the entire inner workings of the company, including its internal communications.
When data is hacked on this scale, the company is placed at a competitive disadvantage for future contracts Hackers and scam artists don’t care that everyone signed an NDA.
2. Your Own Employees are a Security Risk
Perhaps you’ve heard about the controversy surrounding Hillary Clinton’s private email server? For corporations, the lesson behind the news stories is that executives and employees don’t always follow the company’s security protocols. You may have the most secure email server in the world, but as soon as someone uses a hotel computer and a personal email account for company business, your email isn’t so secure anymore.
When they’re on the road or at home, employees can find it quicker and easier to use something other than the company email. Personal mobile devices can be lost and hacked.
You may have the most secure email server in the world, but as soon as someone uses a hotel computer and a personal email account for company business, your email isn’t so secure anymore.
3. The People on the Other Side of Negotiations are a Bigger Security Risk
If you’re negotiating contracts with, say, the U.S. Department of Defense, you can be pretty sure they’ve got some security protections built into their emails. But what if you’re negotiating a contract with a small-batch coffee roaster in Idaho? Or a manufacturer in China?
You may be a big company with top-notch email security features, but many of your contracts may involve smaller businesses that don’t have the capital for sophisticated email security, or that rely on internet email services like Gmail or
4. It’s Easy to Screw Up with Word’s Track Changes Feature
Most companies use Word for contract drafting, and they then circulate drafts and collect comments through Word’s Track Changes feature. The thing about Track Changes is that it’s not always easy to tell when it’s on. If an employee neglects to accept or reject all proposed changes and delete all comments, you can disclose confidential information to the opposing party.
This can reveal all sorts of confidential data, from business and negotiating strategy to financial information. In some cases, it can disclose confidential attorney-client.
5. Human Error Is Always a Problem
Who hasn’t hit “send” on an email and then realized the email went to the wrong person? Or that you hit “reply all” when you meant to reply only to the sender?
But what happens when “reply all” sends a confidential internal negotiation document to the other party to a proposed contract? Or when a clerical employee inadvertently sends out the wrong version of a contract for signature? In our fast-paced, multitasking world, these things can and do happen, and they can compromise confidential information, increase the cost of contracting, and place you at a business disadvantage.
In the digital age, businesses have increasingly looked to contract management software as a way to reduce human errors when signing contracts. This is due to the fact that email-based contracts are highly susceptible to mistakes, typos, and other errors which can cause major issues in the future. By using contract management software, businesses can eliminate these risks while still taking advantage of important features such as automated signature tracking and document storage.
Human error is always a problem, especially when it comes to important documents. Emails are a primary form of communication for individuals and companies alike, but if an email contract is signed without the proper verification, an organization can be left in a difficult situation. To avoid this risk, organizations have implemented processes that protect themselves from accidental human errors.
One way to safeguard against human error is to use digital signature software with built-in security protocols to ensure contracts are properly verified and authenticated before they are sent out. This provides organizations with peace of mind that their contracts will be legally binding and enforceable under the law; not just relying on someone’s good intentions or sloppy paperwork. Organizations may also choose to use two-factor authentication when signing electronic contracts via email; creating one more layer of protection should any malicious activity occur.
Contract management software provides an efficient solution for keeping track of all aspects of a contract from start to finish. It allows users to create and store contracts electronically with multiple stakeholders involved throughout the process. Additionally, with automated signature tracking enabled, users can easily view who has signed off on certain elements of a contract without having to manually review each document themselves.
At Parley Pro, we have an alternative to chaotic and insecure email negotiations. Our contract negotiation software provides greater security, more transparency, and better control over your contract negotiations than you’ll ever get through email.
Let us show you how it works. Contact us to schedule a demo.