Electronic Signature for Contracts: A Guide for Contract Managers

What Are Electronic Signatures?

Electronic signatures are digital methods used to signify agreement or approval on electronic documents. Unlike scanned images of handwritten signatures, electronic signatures involve data in electronic form that is logically associated with a contract or record. Common types include:

1. Simple Electronic Signature (SES): Basic electronic marks or clicks indicating consent.
2. Advanced Electronic Signature (AES): Provides higher security by uniquely linking the signature to the signer and detecting any changes to the signed data.
3. Qualified Electronic Signature (QES): Meets the highest standards with additional verification and is often legally equivalent to a handwritten signature in certain jurisdictions.

Electronic signatures are designed to provide the same legal effect as traditional wet ink signatures under many regulations.

How Electronic Signatures Work in Contract Management

Electronic signature workflows typically involve sending documents to one or multiple recipients for signing. Features often include:

1. Creating reusable templates for recurring contracts.
2. Setting a signing order to manage sequential approvals.
3. Adding signature and form fields directly to documents.
4. Sharing secure links for recipients to sign online.
5. Sending automated reminders to pending signers.
6. Tracking document status in real time.
7. Downloading finalized documents with signatures and audit trails showing timestamps and activity.

These capabilities streamline contract approvals, reduce manual handling, and improve visibility into contract status.

Legality and Compliance for Contracts

Electronic signatures are widely recognized under various laws, with key frameworks including:

1. United States: ESIGN Act and UETA establish that electronic signatures have legal validity if parties agree to use them.
2. European Union: eIDAS regulation defines standards for electronic signatures, including SES, AES, and QES, with specific legal effects.
3. Global Standards: Many countries have adopted similar laws recognizing electronic signatures, often requiring audit trails and evidence of intent.

For contract managers, ensuring that electronic signature solutions provide secure audit trails and maintain document integrity is critical for enforceability in disputes.

Benefits of Electronic Signatures for Contract Managers

Electronic signatures offer several practical advantages:

1. Time Savings: Accelerate contract turnaround by eliminating physical printing, mailing, and scanning.
2. Cost Reduction: Lower expenses related to paper, postage, and storage.
3. Improved Security: Digital records with timestamps and activity logs reduce risk of tampering.
4. Remote and Global Operations: Facilitate contract execution across locations and time zones.
5. Workflow Efficiency: Automate reminders and status tracking to avoid delays.

These benefits contribute to more efficient and reliable contract management processes.

How to Choose an Electronic Signature Solution

When selecting an electronic signature tool, contract managers should consider:

1. Compliance Features: Ability to generate detailed audit trails and maintain document integrity.
2. User Access Controls: Support for multiple admins and role management.
3. Template Management: Capability to create and reuse standardized contract templates.
4. Signing Workflow: Options to set signing order and handle multiple recipients.
5. Integration Options: Availability of APIs and webhook support for system integration.
6. Document Tracking: Real-time status updates and expiration settings for signing requests.
7. Deployment Flexibility: Options for cloud-based or self-hosted solutions.
8. Pricing Model: Transparent pricing without per-envelope or per-seat fees.

Evaluating these criteria helps ensure the solution fits organizational needs and compliance requirements.

Common Pitfalls to Avoid

Contract managers should be aware of potential challenges:

1. Using scanned images of signatures instead of proper electronic signatures, which may lack legal validity.
2. Choosing solutions without sufficient audit trails or security features.
3. Overlooking expiration dates or reminders, leading to stalled contracts.
4. Ignoring local legal requirements or cross-border compliance issues.
5. Failing to train users on proper electronic signature workflows.

Addressing these pitfalls early supports smoother contract execution.

Security and Audit Considerations

Security is paramount in electronic signature use for contracts. Important aspects include:

1. Secure access tokens or authentication methods to verify signer identity.
2. Detailed audit trails capturing document activity, timestamps, and IP addresses.
3. Encryption of documents during transmission and storage.
4. Ability to download finalized signed documents with embedded signatures.
5. Setting expiration dates to limit signing window and reduce risk.

These measures help protect contract integrity and provide evidence in case of disputes.

Best Practices for Implementing Electronic Signatures

To optimize electronic signature use, contract managers should:

1. Standardize contract templates with predefined signature and form fields.
2. Define clear signing orders for multi-party agreements.
3. Use automated reminders to keep signers on track.
4. Monitor document status regularly from a centralized dashboard.
5. Maintain secure backups of signed contracts and audit trails.
6. Train all stakeholders on legal and procedural aspects.
7. Periodically review compliance with evolving regulations.

Following these practices enhances efficiency and reduces risks.

A Practical Option: GoSign

GoSign is an example of an electronic signature solution offering features relevant to contract managers. It supports sending documents to multiple recipients with customizable signing orders and reusable templates. Users can add signature and form fields directly to contracts and share secure links for online signing. Automated reminders and expiration dates help manage signing timelines. The platform provides audit trails and finalized signed documents for compliance purposes. Additionally, GoSign offers API access and webhook support for integration with existing systems, along with options for self-hosting.

Explore GoSign to learn more →

Checklist for Contract Managers Using Electronic Signatures

• [ ] Verify legal requirements for electronic signatures in relevant jurisdictions.
• [ ] Choose a solution with robust audit trail capabilities.
• [ ] Create standardized contract templates with signature fields.
• [ ] Define signing order for multi-party contracts.
• [ ] Set expiration dates on signing requests to avoid indefinite validity.
• [ ] Enable automated reminders for pending signers.
• [ ] Monitor document status regularly via dashboard or notifications.
• [ ] Ensure secure access and authentication for signers.
• [ ] Download and securely store finalized contracts with audit logs.
• [ ] Train team members on electronic signature processes and compliance.

FAQ

What is the difference between electronic signatures and digital signatures?

Electronic signatures are any electronic indication of agreement, while digital signatures are a specific type of electronic signature that uses cryptographic methods to secure the signature and verify signer identity.

Are electronic signatures legally valid for contracts?

Yes, electronic signatures are legally recognized under laws such as the ESIGN Act, UETA, and eIDAS, provided certain conditions like signer intent and record retention are met.

Can electronic signatures be used for international contracts?

Electronic signatures can be used internationally, but contract managers should verify compliance with local laws and regulations in each jurisdiction involved.

How secure are electronic signatures for high-value contracts?

Security depends on the solution's features such as audit trails, encryption, signer authentication, and document integrity measures, which help mitigate risks in high-stakes agreements.

What happens if a signer does not complete the electronic signature process?

Most platforms allow setting expiration dates and sending automated reminders to prompt signers. If a signer does not complete signing before expiration, the request may need to be resent or renegotiated.

Can electronic signature solutions integrate with other contract management tools?

Many electronic signature solutions offer APIs and webhook support to enable integration with contract management systems, CRM platforms, or custom workflows.

How can contract managers track the status of documents sent for signature?

Contract managers can monitor document status through dashboards that show which recipients have signed, who is pending, and when reminders were sent.

Is it necessary to have all signers use the same electronic signature platform?

No, signers typically do not need to have accounts or use the same platform; they receive secure links to sign documents online without additional software installation.

What are the common mistakes to avoid when implementing electronic signatures?

Avoid using scanned signatures, neglecting audit trails, ignoring expiration settings, and failing to train users on compliance and workflow procedures.

How can contract managers ensure compliance when using electronic signatures?

By selecting solutions with strong audit capabilities, maintaining secure records, following legal guidelines, and regularly reviewing processes against current regulations.