Companies face relentless pressure to perform better, faster, cheaper, while maintaining a high level of service and guaranteed results. Digitization is paving the way, through innovation in business process reengineering, in breaking down inefficiencies within an internal organization of a company. Embracing e-contracting – moving away paper based systems – to build more efficient business relationships is a new trend in breaking down the inefficiencies in the relationships with external parties.
The concept of an e-contract
An e-contract or electronic contract has different characteristics than traditional paper contracts. While a paper-based contract document is a static view on the rights and obligations of the contracting parties, an e-contract could actually monitor these rights and obligations during the lifecycle of the Agreement.
E-contracts are not only used as a legally binding agreement between a buyer and seller but can also be used across different organizational business processes. Legal regulations, such as the European directive for electronic signatures and national e-commerce regulations have setup a framework for using electronic contracts in business.
E-contracting includes two stages: contract establishment and contract enactment (contract performance, compliance).
The purpose of using an e-contract is twofold. First, the contract provides a guarantee to all contractual partners according to the clauses of the signed contract and relevant laws. Second, contractual partners build a business relationship using an e-contract.
There are three critical aspects for the establishment of an e-contract (parties come to mutual agreement on the contract content). First the subject needs to be defined exactely. Second, the legal validity is formulated. Third, the price and conditions of each clause need to be negotiated in relation to the quality of deliverables and the quality of services and in relation to the legal terms.
Benefits of e-contracting
In short, e-contracting can protect contractual partners in electronic environments, reduce time-to-contract and reduce process costs. It can also provide new opportunities on contract management, contract content reuse and contract monitoring.
Other benefits are:
- Avoiding errors
- Leveraging templates
- Reducing time-to-contract
- Machine processible data
How to create an e-contract?
Depending on whether networks are used during establishment stage, e-contracts can be created online or offline. The collaboration can be asynchronous (e.g. by email) or synchronous (e.g. online platform).
Moreover, the process can be finished on a shared platform (e-signature). The ownership of the contracting platform can thus be with a third party or with one of the contracting parties.
Using an all-encompassing enterprise legal software like effacts allows you to create all types of e-contracts – Business Agreements, NDA’s and Purchase Agreements – in a few clicks and store them in one central repository. No more printing and circulating for approval or sending via unsecure email networks. You can choose who has access to contracts and when and even set up alerts for renewals so you never miss a deadine.
allows you to:
- Make templates available to co-workers to support quick drafting of electronic documents, with your oversight
- Improve collaboration & prevent data breaches by making certain contracts available to co-workers / departments, or making documents confidential
- Assign and track approval tasks
- Complete a fully paperless workflow thanks to integration with e-signature providers, like DocuSign or Adobe Sign.
- Then, store the electronic contract (PDF), alongside all the contract’s key information and documents, so that you can track contract status, audit and report of your entire contract portfolio, stay on top of your obligations,
Above image: create a Purchase Agreement in Legisway
If you’re keen to make e-contracts more streamlined, efficient and secure, why not schedule a free demo of Legisway to see how it could work for your business.