Are Online Contracts Legal? The Truth About Digital Agreements and E-Signatures

Are you running a digital business and wondering whether your virtual agreements are valid? Then read on as we discuss everything you need to know about the legality of digital contracts. ⚖️

No doubt, the internet has made it incredibly easy to do business with anyone, anywhere, and anytime. However, nothing’s perfect, right? This same internet has also opened up a whole new world of questions and concerns.

Like, is that contract you just sent via e-mail actually legal? Can you really trust that digital signature? And what happens if something goes wrong with a client halfway around the world?

Trust me, I get it. As a lawyer, I appreciate the value of having tangible or physical evidence. And there’s something about a physical signature that just feels more… official, you know? So I understand why many new businesses and individuals are constantly second-guessing whether their digital contracts are “real” enough.

Well, that’s exactly what I’ll be touching on in today’s post. Are online contracts legally binding or not? Let’s find out!

Are Online Contracts Legal?

Sure, online contracts are convenient, but are they actually legal? Well, I’ll be answering this question and more below. In this post, we’re going to break down everything you need to know about what makes a good contract, particularly digital ones.

We’ll open the lid on what it means to enter into a contract digitally, and whether or not these digital agreements are just as legit as their paper counterparts. If they are indeed legally binding, what do you need to know to make sure your online contracts are bulletproof? Read on to find out!

 What Are Online Contracts?

Simply put, online contracts are agreements that are created, signed, and executed over the internet. Unlike traditional paper contracts, online contracts can be drafted and stored digitally, often using electronic signature software or digital platforms. What sets them apart is the manner in which they are created and signed – typically through online forms or e-mail exchanges rather than the traditional pen-and-paper method. This may sound a little scary when you are first dipping your toes in the world of online business, but actually, it not only streamlines the process, but also allows for quicker agreement and implementation.

Are Online Contracts Legally Binding?

Let me paint you a picture: Remember when you last downloaded a new app and you quickly scrolled through that super long agreement and hit the “I Agree” button? Yes, I confess I’m guilty of this as well. But, did you know that was technically an online contract? Did you also know that according to the Electronic Signatures in Global and National Commerce Act, it’s legally binding? That’s right, electronic signatures are recognized globally and online contracts are, in fact, legally binding!

As stated above, online contracts are basically any agreements that are created, signed, or managed digitally. They come in various forms. There are e-signature documents, digital forms, e-mail agreements, and online terms of service. Click-wrap agreements are another form of online contract. That’s where those “I Agree” buttons I mentioned earlier come into play.

But here’s where it gets interesting what makes online contracts different isn’t just that they’re digital or legally binding. It’s how they’ve completely transformed the way we do business.

Back in the day, getting a contract signed meant drafting the contract, printing multiple copies, and mailing them to your client. Then,you’d have to wait, like, forever for them to sign and mail them back to you. Mind you, that’s like the best-case scenario, because many things could go wrong. The contract could get lost in their mail pile. Or when you finally get it back, you may realize they forgot to initial an important page, derailing the whole process.

But now, you can send and sign contracts online within minutes just by clicking a button. Different geography, time zone, cultural backgrounds, and/or language differences are no hindrances any longer. Kind of amazing, right?

How To Make A Legally Binding Contract Online

Whether you’re sending your first contract or your five hundredth, these steps will help ensure your online contracts are as legally binding as those old-school paper ones.

Step 1: Start with a solid contract template.

First things first: you need a contract template that actually covers all your bases. And no, copying and pasting from random websites isn’t going to cut it. So, what are your options? You can create a contract from scratch. However, this method is time-consuming and risky unless you’re a lawyer. You could also hire a lawyer to draft one, but this may be expensive, although reliable. Then, there’s the option of using pre-vetted, legally sound templates like the ones in my template shop. These templates have saved my clients thousands in legal fees!

Whatever route you choose, make sure your template includes:

• Clear contract terms and conditions
• Payment details
• Scope of work
• Cancellation policies
• Dispute resolution procedures

Step 2: Include all essential contract elements.

This is where things get real. Your contract needs certain elements to be legally binding. I’m talking about key elements like the following:

• Offer and acceptance
• Consideration (i.e., what each party is giving/getting)
• Clear intentions to create legal relations
• Capacity of parties to contract
• Legal purpose

Guess what? When you use a properly structured template (like the ones in the template shop), these elements are already baked in. So, no more wondering if you forgot something important!

Step 3: Customize your contract.

This is where you make that template your own. It’s like decorating your first apartment – you want it to reflect your business while still being functional!

So, take time to add your specific business details, customize the terms of your services, and include any unique requirements. Also, check to ensure the language matches your business type. Otherwise, make the needed adjustments. And, just so you know, the templates in my shop are designed to be super easy to customize. Just fill in the blanks, and you’re good to go!

Step 4: Make it clear and readable.

The fact is that a contract isn’t worth much if no one can understand it. You want your clients to read your contract and think, “Wow, this is so clear!” not “What language is this even in?” No one likes legalease.

To get the former reaction, ensure you use plain language throughout contract formation. Break up long paragraphs while adding headers and sections where needed. This can help make reading through the contract more efficient and less boring for the other party. Another important action is to make important terms stand out, either by capitalizing or bolding the text. You should also include definitions for any technical terms for better understanding.

Step 5: Set up proper e-signing.

This step is where you make things official! Having your documents signed electronically is crucial for making your online contract legally binding. To do this, you’ll need:

• A reliable electronic signature platform (DocuSign, HelloSign, etc.)
• Clear signing instructions to seal both parties agreement
• Timestamp and tracking capabilities
• A way to verify signers’ identities

Step 6: Store and protect your contracts.

Finally, you need to keep those contracts safe and sound. Think of this as creating a digital vault for your most important business documents. So, keep detailed records of when and how they were signed. You can also set up a system for contract renewal reminders. Most importantly, a backup system must be in place. This can be achieved by saving the contracts in multiple secure locations.

Online contracts aren’t just the future – they’re the present.

You’re not just building a business; you’re building a legacy. And that legacy deserves to be protected with rock-solid legal foundations. That’s what contracts are meant for.

However, having proper contracts isn’t just about protecting yourself. It’s about being a professional who takes their business seriously. And, now that you know online contracts are just as legally binding as those dusty paper versions, you need to go all out to make them enforceable.

Unless you had a lawyer walk you through everything your online business needs, chances are you’re missing something. That’s totally normal! But you do need to take it upon yourself to fill in those gaps. Download what you need from my online shop right now. Or get your entire legal foundations handled using the Ultimate Bundle® right here.

When it comes to online business, you already know… you can’t be sketchy about it! Start getting your foundations in place today so you can stop operating illegally and get the peace of mind you deserve.

Grab whatever legal template you need inside my template shop.

Or get everything done in one-fell-swoop using the Ultimate Bundle® (most popular).