How Technology Has Limited Paper Contracts



One of the major causes of wasted resources on our planet is the excessive use of paper. Whole forests are destroyed to meet this constant need. Fortunately, the use of virtual documents is reducing the demand for paper consumption.

If you’re interested in recycling, you might think of it as a community contribution to lightening your footprint on the ecosystem. However, you can also contribute to the ecosystem through your business, and there are many ways to run a paperless office as well as recycling paper that has served its purpose.

This initiative to waste less paper can include limiting paper contracts.

How do you get rid of paper when it comes to something as intrinsic to your business as contracts? When two or more parties agree to something, isn’t it necessary that they sign on paper? The solution is simpler than you might think–just use an electronic signature application on PDF documents to replace signatures that would require pen and ink.

10 Interesting Facts about Paperless Contracts

If you’re wondering if an electronic signature is legally binding, here are 10 interesting facts about this new way of doing business:

1. Yes, it’s legal. In 2000, a federal act called the Electronic Signatures in Global and National Commerce Act (ESIGN) was enacted. Here is the exact wording: “a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”

2. It is extremely convenient. You already understand how useful it is to use electronic versions of dictionaries, newspapers and magazines, and phone books and directories. Now electronic versions of legally binding contracts have joined the list of things that can be done quickly and easier. Electronic contracts are yet another convenience at your fingertips.

3. The idea is catching on fast. You won’t find much resistance when you propose using a paperless contract. The word has spread far and wide across the world and most people in business have become accustomed to doing business online. Electronic signatures make it easy to do business with people you may never meet in person.

4. There is a legal definition for it. So what, exactly, is an electronic signature? According to ESIGN, it is “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”

5. It takes seconds to sign a contract. All you have to do to create an electronic signature is to click a mouse to indicate your intention to sign by clicking the “I agree” box, type your name into an email message, or use a stylus on a mobile device.

6. It can be done anywhere. You don’t need to be sitting in front of your desktop to do it. You can just as easily use a laptop or use a tablet or smartphone.

7. You don’t have to print it out and file it. No paper is necessary at all. The documents can stay in its electronic form throughout the life of the contract.

8. It’s the fastest solution yet. In the old days, two parties had to make the time to meet in person. Sometimes, this required extensive travel. The next best alternative was to receive an email, download the attachment, print it out, sign it, and fax it back. Now it takes seconds to sign a contract on a smartphone.

9. It’s actually more legally-binding than a wet ink signature. While an ink signature can be disputed as a forgery if there are no credible witnesses, an electronic signature leaves footprints. For instance, an email leaves tracks between a sender and receiver that can be seen by the ISP. The integrity of the signature can be further ensured by using the signer’s computer address (IP) or the signer’s GPS location. Other safeguards are the use of a user name and password prior to signing the document.

10. It works mainly for business documents. Electronic signatures work well for most business documents. In limited circumstances, it can work for personal documents, too. For instance, formal letters of engagement can use electronic signatures.

Ink Signatures Still In Wide Use

Electronic signatures are widely used across the world because the validity of the signature can be proven. Ample evidence around the signature’s creation makes it legally defensible. Because of the many advantages of electronic signatures, it’s easy to conclude that most contracts now use them.

Despite the popularity of electronic signatures, this does not mean that most contracts are now digital. When heads of state sign contracts, they still do it on paper with plenty of witnesses. Similarly, large corporate contracts still use in-person meetings and pen signatures. In addition, electronic documents are still not accepted for many personal documents like divorce papers and living wills.

It’s more realistic to say that electronic documents have replaced faxed documents. They have much higher fidelity than contracts that would traditionally have been signed using fax machines.

However, in the final analysis, it’s not presumptuous to assume that as the modern world becomes increasingly digitized, the use of wet ink contracts will become antiquated.



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