In the old days contracts were printed on paper, signed with “wet ink”, and kept in a physical file for safekeeping. Now we’ve progressed to pdf’s. In most cases this means one party emails the contract and the other person has to print the signature page, sign it, scan it, and email it back.
Is there an easier way?
Could the receiving person just type in their signature without printing the document? Or better yet, could he or she just reply by email and say “I accept”?
The answer is basically yes. Thanks to some developments in the law, and subject to certain exceptions, virtually any medium in which two parties indicate the terms of their agreement and their intent to be legally bound, is valid. You can type in your signature, paste in a jpeg of your signature, check a box indicating that you accept the terms, or simply email back “I accept” or “confirmed”.
The Virtual Contract
However, when two private parties enter into a contract (as opposed to one shopper buying something online), I still recommend something pretty close to the old-fashioned contract. It doesn’t necessarily have to be printed on paper and wet-signed in ink, but it should be a document with four corners (perhaps in pdf) with a title, the terms, and signature blocks at the end. You don’t want to walk into court with a print-out of an email swirl and have to convince the court the other party agreed to the terms, ask the court to figure out what those terms are, and enforce them. You want to walk in with a traditional looking document that states the terms of the agreement and is either signed at the bottom or has some other clear indication of assent from both parties.
So how do we do that without having to print the signature page, sign it, and scan it? One option is a virtual contracting service like DocuSign, Adobe Sign (formerly EchoSign) or HelloSign. Another option is for each party to either paste in an electronic version of their signature (many software tools will perform this function) or just type their name into the Word document and save it as a pdf. Not quite as good but probably valid would be for one party to email the contract as an attachment, each party email that they accept the contract, and then save the emails in the same pdf as the (unsigned) contract. In the latter cases, you would want to insert a clause into the contract itself whereby the parties agree to conduct the transaction by electronic means and that electronic signatures have the same effect as manual.
Note there are exceptions to the kinds of documents that can be signed this way. You can’t do this with wills, codicils or testamentary trusts, secured promissory notes, security agreements (granting another party a lien on collateral of the signing party), documents regarding divorce, adoption, or other family law matters, official court documents, etc.
Corporate Notices and Communications
For those of you who have shareholders and boards of directors, you may sometimes wonder if there is a better way to advise them of upcoming meetings than sending them paper notices by snail mail. Or if there is a better way of getting board resolutions signed than making your directors print documents, sign them, scan them, and email them back. The answer is yes. If you make certain amendments to your bylaws and get everyone to sign a consent form, you can send shareholders meeting notices by email. You can also describe the board resolutions in an email and ask your directors to simply reply “I consent” without having to print anything. Feel free to reach out to me if you are interested in setting this up.
This article is not intended and should not be relied upon as legal or tax advice pertaining to any specific matter. You are encouraged to seek competent legal and tax counsel before proceeding with any transaction involving any of the matters discussed above.