What Is Electronic Contracts | How It Helps Businesses In 2025
Every year, U.S. businesses spend nearly $8 billion just to handle paper documents. From printing and filing to storage and retrieval.
In a world that’s rapidly digitizing, why are so many companies still stuck in the past when it comes to contracts?
Grasping the concept of electronic contracts is key to thriving in today’s digital-first business landscape. These are contracts that are created, reviewed, and signed contract entirely online without the need for printing or physical signatures.
By moving away from traditional paper-based methods, businesses can cut down on administrative expenses and unlock a host of benefits, from faster turnaround times to improved accessibility and security.
Key takeaways from this blog,
- Electronic contracts are legally valid and eliminate the need for paper signatures.
- They streamline the creation, signing, and storage process, making it faster.
- It helps to save money, enhance security, and reduce paper waste.
- Using trusted platforms and secure storage make sure easy access to contracts.
What Is Electronic Contracts
It refers to the process of tracking agreements from initiation to contract renewal or expiration. It makes sure that all contract terms, obligations, deadlines, and milestones are followed, reducing legal risks and ensuring smooth operations.
Organizations that fail to track contracts efficiently often struggle with missed renewal opportunities, compliance violations, disputes, and financial losses. To avoid these issues, businesses are increasingly adopting contract tracking software solution and apps that offer visibility, automation, and centralization.
Why is Contract Tracking Important?
An electronic contract is a contract that is made, shared, and signed over the internet. Users don’t need to print papers or sign anything with a pen. Everything happens online using your computer, phone, or tablet.
This makes things a lot easier and faster. With just a few clicks, people can read the contract, agree to it, and sign it all from anywhere in the world.
Even though it is done online, an e-contract is still legal and official. It works the same way as a paper contract, as long as a few important things are there:
- Both sides agree to the contract
- There is a clear offer and acceptance
- The people who signs knows what they are agreeing to
Most countries have special laws that stats digital contracts and signatures are valid. This means businesses can rely on e-contracts to be secure, legally binding, and user-friendly.
Key Elements In Electronic Contracts
Contract tracking follows a structured approach to ensure agreements are properly managed throughout their lifecycle. From creation to renewal, every stage requires careful monitoring to prevent missed obligations and ensure compliance.
1) Contract Creation and Documentation
When entering into any agreement, whether online or offline, it is important to understand the basic building blocks that make a contract valid. contract. Let us look at these core elements.
1) Offer
An offer is the foundation of every contract. It is when one party presents clear terms to another, outlining what they are willing to do or provide. This offer should be specific, so the receiving party knows exactly what is being proposed. In the case of an electronic contract, the offer is typically presented digitally through a document or platform where both parties can view and respond.
Things to consider
- The clauses of the offer should include essential details.
- Offers should be properly documented and easily accessible to the other party.
- The offer should be straightforward and well-defined.
2) Acceptance
Acceptance takes place when the other person clearly agrees to the terms of the offer. This is not just a casual acknowledgment but a clear agreement to the specifics laid out in the offer. In electronic contracts, acceptance is often done by clicking an “I agree” button or using an e-signature, confirming that the person is accepting the offer. During the process organization make sure to,
- Acceptance must be communicated clearly.
- Both parties should make sure they fully understand the terms before accepting.
- It’s important to have a record of the acceptance
3) Promise
A promise in a contract is the commitment each party makes to fulfil their side of the agreement. One party promises to deliver goods, services, or actions, while the other promises to pay or take some other action in return. This mutual exchange of promises is the essence of any contract, including electronic ones. In this process consider this steps,
- Promises must be realistic and achievable, based on the terms agreed upon.
- The timing of each party’s promise should be specified.
- Clear documentation should exist, confirming each party’s commitment to their promise.
4) Consideration
Consideration refers to what each business will give or receive as part of the agreement. It’s the value exchanged in the contract. In an electronic contract, this might be a payment for a service, delivery of goods, or even an agreement to perform a specific task. The consideration makes the contract valuable for both parties.
- The exchange should be fair and proportional.
- For an electronic contract, both parties should clearly state what they will provide.
- Consideration should be something meaningful and beneficial to both sides in the agreement.
5) Capacity
For a agreement to be legally valid, both businesses must have the legal capacity to enter it. In the digital world, capacity remains the same whether signing a contract electronically or on paper, each party must be capable of understanding and agreeing to the terms.
- Both parties should be legally of age and mentally understanding the agreement.
- Make sure that there is no coercion or undue influence when entering the contract.
- In an online setting, verifying the identity of all parties can be crucial to ensure authenticity.
How Does Electronic Contracts Work
Creating and signing an electronic contract is a fast and straightforward process that helps businesses and individuals save both time and money. Here is a closer look at how e-contracts typically work.
1) Drafting
The first step in creating an electronic contract is drafting the contract itself. This is usually done using contract management software or pre-built templates. The terms, conditions, and specific clauses are customized based on the agreement. This allows the document to address the unique needs of the parties involved, making sure everything is clear and detailed from the start.
2) Review and Discussion
Once the contract is drafted, it is shared with all parties who are part of the agreement. A study by Adobe, says that 77% of the business electronic signature supports business.
Each person can carefully review the contract and suggest any changes they believe are necessary. This step can include negotiations, where each party can discuss the terms to make sure they are fair and mutually beneficial. All communication and feedback happen digitally, which speeds up the process compared to traditional methods that might require meetings or phone calls.
3) Signing
After all the terms are agreed upon, the final step is signing the contract. Instead of meeting in person or printing out documents, the contract is signed electronically.
These tools are designed to authenticate the signatures, making sure the contract is valid, and the identities of the signers are verified.
This method eliminates the need for physical paperwork while maintaining security and trust in the process.
4) Finalization
Once everyone has signed the contract, it is considered finalized. All businesses involved will receive a copy of the signed contract for their records. The document is securely stored in the digital system, making it easy to access at any time.
This digital storage also means that you do not need to worry about losing important paperwork, and the contract can be referenced quickly whenever needed.
This efficient process allows organizations to focus on the important aspects of their agreements rather than getting bogged down by the traditional paperwork process.
The Process of an Electronic Contracts
Creating an electronic contract is a quick and efficient way to formalize agreements without the hassle of paperwork, ensuring both convenience and security for all parties involved. Here is how to create it.
1) Choose the Right Platform
The first step in creating an electronic contract is to select a reliable platform. This can be contract management solution that suits your needs. Look for one that is easy to use, secure, and helps manage contracts efficiently. By picking the right platform, you’ll set yourself up for a smooth and organized process.
2) Create the Contract
After choosing the right platform, the next step is to create the contract content. This step involves outlining the terms and conditions of the agreement. You can use templates or build your contract from scratch. Make sure the document is clear, with all the necessary details, such as payment terms, deadlines, and obligations. Having everything in writing helps avoid confusion later on.
3) Send for Review
After drafting the contract, share it with all parties involved for review. Each person should go over the document carefully to make sure everything is correct. If changes are needed, they can be suggested, and the contract can be adjusted. This make that everyone agrees to the clauses before moving forward.
4) Sign Electronically
When everyone agrees, it’s time to sign the contract. Instead of printing and signing paper copies, use electronic signatures. These digital signatures are just as valid as handwritten ones and provide a secure way to confirm your commitment to the agreement. Signing electronically speeds up the process and saves time.
5) Store and Track
After the contract is signed, store it securely in a digital system. This way, you can access it anytime, keeping everything organized and safe. Digital contracts are easy to track and manage, so you can stay on top of your agreements without worrying about losing important paperwork.
By following these simple steps, you can create, manage, and execute electronic contracts quickly and efficiently, all while maintaining security and clarity throughout the process.
Benefits Of Leveraging Electronic Contracts
The electronic signature software market is expanding rapidly, expected to grow from $ 3.3 billion in 2022 to a projected $ 35.7 billion by 2030, with a CAGR of 34.2%. Adoption is rising across both public and private sectors.
1) Efficiency
One of the main reasons businesses adopt electronic contracts is speed. Traditional contracts can take days or even weeks to prepare, print, deliver, review, and sign. With electronic contracts, this entire process happens online.
You can draft a contract in minutes, send it to the other person right away, and receive a signed version within hours or even minutes.
This faster pace helps you complete deals quicker, onboard clients or employees sooner, and spend less time waiting for paperwork.
Over time, this kind of speed adds up and helps your business move forward without delays.
2) Cost Savings
As per Exploding topics, electronic signature integrated contracts can save up to 28 dollar for each signed contracts.
If you’re handling dozens or hundreds of contracts each month, these costs can become quite high. By using digital contracts, you reduce or eliminate many of these expenses.
You also cut down on time spent handling documents, which means your team can focus on more important tasks. All of these savings add up and make electronic contracts a budget-friendly choice over time.
3) Convenience
One of the best parts of using electronic contracts is how easy they are to manage. You don’t need to be at your desk or in the office to get things done.
You can create, edit, or sign a contract from your phone, tablet, or laptop whether you are working from home, traveling, or sitting in a meeting. This flexibility is helpful when working with clients or partners in different locations or time zones.
Everyone involved can access the same contract from wherever they are, which makes it much easier to complete deals without waiting for anyone to be physically present.
4) Security
Keeping contracts safe is very important. With traditional paper contracts, there’s always the risk of losing documents or someone making changes without your knowledge.
Electronic contracts help solve this problem. Most platforms use strong safety features such as password protection, encrypted files, and access tracking.
You can also see when someone opens the contract, who signed it, and if any changes were made. This gives you full control and confidence that the agreement is safe, accurate, and trustworthy.
5) Environmental Impact
Using electronic contracts is also a great way to support the environment. Every time you use a digital contract instead of printing a paper one, you help reduce paper waste and save natural resources.
This is especially helpful for businesses that handle many contracts each year. By choosing paperless options, you lower your company’s carbon footprint and contribute to a more sustainable way of working.
Many customers and clients appreciate companies that care about the environment, so this can also reflect well on your brand.
Challenges of Using Traditional Contracts
In today’s connected business world, paper contracts can hold companies back in ways that are costly and frustrating. Electronic contracts provide a faster, more reliable way to handle agreements, while sticking to traditional methods creates unique obstacles. Below, we outline specific, real-world challenges businesses face when avoiding electronic contracts, written in a clear, professional, and polite tone to offer helpful insights.
1. Difficulty Tracking Contract Status
With paper contracts, it’s hard to know where a document is in the signing process. For example, a small business sending a contract to a client might wait weeks without knowing if the client received, reviewed, or signed it. This lack of visibility can lead to awkward follow-up calls or emails, potentially straining client relationships. Electronic contracts provide real-time updates, showing exactly when a document is viewed or signed, so businesses can stay informed and act confidently.
2. Inconsistent Record-Keeping
Paper contracts often lead to messy record-keeping, especially for businesses handling multiple agreements. For instance, a construction company managing contracts with suppliers, subcontractors, and clients might store documents in different folders or offices, making it tough to find a specific agreement later. This can cause problems during audits or disputes, as missing paperwork could weaken a company’s position. Electronic contracts are stored in one secure online system, making it easy to organize, search, and retrieve agreements instantly.
3. Challenges Meeting Legal Deadlines
Some agreements, like those for real estate or government contracts, have strict deadlines for signing or submitting. Paper contracts can miss these deadlines due to slow mailing or misplaced documents. For instance, a company bidding on a public project might lose the opportunity if their contract arrives late. Electronic contracts enable quick signing and submission, helping businesses meet tight deadlines and stay competitive.
Best Practices of Handling Electronic Contracts
Electronic contracts offer a powerful way to manage agreements efficiently but using them effectively requires thoughtful practices. Below, we share clear, practical steps to help you organize, secure, and maintain your electronic contracts.
1. Choose a Reliable Platform
Selecting a trusted platform is the foundation of managing electronic contracts well. Look for tools that offer secure storage, easy navigation, and features like digital signatures and status tracking.
For example, a small business might pick a platform that allows clients to sign contracts quickly online, saving everyone time.
Research options carefully, read user reviews, and test the platform to confirm it meets your needs before committing.
2. Create Clear, Standard Templates
Having ready-to-use templates saves effort and keeps your agreements consistent. Work with your legal team to draft templates for common deals, such as client services or vendor partnerships.
Make sure the language is clear and includes all necessary details, like payment terms or deadlines.
For instance, a legal team could use a template that outlines project scope and revisions, avoiding confusion later. Store these templates in your platform for quick access.
3. Set Up a Secure Storage System
Keeping your contracts safe and organized is critical. Use a cloud-based system with strong security, like encryption and password protection, to store your agreements.
Organize contracts by categories, such as client names or project types, so you can find them easily.
For example, a manufacturing company might group contracts by project or department, making it easier to review terms during production cycles.
4. Track Deadlines and Renewals
Missing a contract deadline or renewal date can lead to lost opportunities or penalties. Use your platform’s reminder tools to stay on top of key dates, like when a contract needs signing or when a subscription renews.
For instance, a property management company could set alerts for lease renewals, giving them time to negotiate with tenants. Check your calendar weekly to stay proactive and avoid last-minute rushes.
5. Verify Legal Compliance
Electronic contracts must follow laws, which can vary by region or industry. Consult a legal expert to confirm your contracts meet requirements, such as including specific clauses or using approved e-signature methods.
Regularly review your contracts to stay updated with changing regulations, keeping your business protected.
6. Train Your Team
Your team needs to know how to use your contract platform correctly. Provide clear training on creating, sending, and storing contracts, as well as handling issues like client questions.
For instance, a sales team trained on the platform can quickly send contracts to prospects, speeding up deals. Offer refreshers periodically to keep everyone confident and reduce mistakes.
By adopting these practices, you will manage electronic contracts with ease and professionalism. Start with a reliable platform and clear templates, then focus on security, tracking, compliance, and training.
These steps will help you save time, build trust with clients, and focus on growing your business.
CLM 365: Where Security Meets Simplicity
CLM 365 is built on the Microsoft ecosystem, giving users a secure and reliable way to manage contracts. With role-based access, version control, and full audit logs, teams can easily track who did what and when. Everything is backed up regularly, and strong security measures keep your data safe at every step. CLM 365 makes contract handling smarter, faster, and safer.
Conclusion
The best deals do not wait for paper. With electronic contracts, everything moves faster signing, sharing, storing. They are secure, smart, and ready when you are. They offer built-in security, full transparency, and instant access from anywhere in the world. Your team works faster. Your deals close quicker. Your clients are impressed.
Start making your deals with efficient and accuracy. CLM 365 helps your process easier. Start your trial today.
Frequently Asked Questions
1) What are the elements of an electronic contract?
An electronic contract (e-contract) includes key elements: mutual consent, where both parties agree to terms, offer and acceptance, with digital agreement; consideration, where value is exchanged, legal capacity, ensuring all parties can legally agree, lawful purpose, meaning the contract must be for a legal activity, an accessible digital record; and electronic signatures to validate consent and identity.
2) How to write an electronic contract?
Step 1: Begin by outlining the key conditions and clauses of the contract.
Step 2: Add space for electronic signatures to confirm the authenticity of the agreement.
Step 3: Establish a simple process for all parties to review and sign the contract electronically.
Step 4: Send the document to all involved parties for digital signatures and final approval.
3) What are the classification of e-contracts?
E-contracts can be categorized into different types, including browse wrap, sign-in wrap, clickwrap, and e-signature agreements.
4) Are electronic contracts legal?
Yes, electronic contracts are just as legal and enforceable as traditional paper contracts. They offer a valid and convenient alternative for businesses, allowing agreements to be signed anytime, anywhere.
5) How secure are electronic contracts?
Electronic contracts are highly secure when proper security measures are in place. They typically use encryption technology, digital signatures, and secure platforms to ensure data confidentiality and integrity. Additionally, features like audit trails and authentication processes help verify the identity of the signers and track changes, making electronic contracts as secure
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