What is an Electronic Contract?

An electronic contract (or e-contract) is a legally binding agreement that is created, negotiated, and signed electronically, typically on an online platform. E-contracts hold the same legal weight as traditional paper contracts in most jurisdictions, provided they meet standard requirements such as offer, acceptance, and consideration.

Digital contract management plays an important role in handling e-contracts, streamlining the entire contract lifecycle from drafting to signing and storing. With digital contract management systems, businesses can automate contract workflows, track versions, and ensure compliance while maintaining electronic agreements’ security and integrity. This enables organizations to manage contracts more efficiently and reduce risks associated with manual processes.

An electronic contract, or e-contract, works just like a traditional agreement—just in digital form. It includes all the key elements needed to make it legally valid and enforceable. Here’s what goes into it:

1. Offer: This is the starting point—one party puts forward clear terms for the other to accept. In an e-contract, this could be a proposal shared through a digital form, a document, or a contract management platform.

2. Acceptance: Once the other party agrees to the offer, the contract starts to take shape. With electronic contracts, acceptance often happens through a digital signature, a click-to-accept button, or even a simple confirmation over email.

3. Consideration: Every valid contract involves an exchange—money, services, goods, or something else of value. This mutual give-and-take should be clearly laid out in the agreement.

4. Mutual consent: Both parties must be on the same page. They need to understand the terms and willingly agree to them. In a digital setting, this is shown through signed agreements, acknowledgment checkboxes, or authenticated user actions.

5. Legal capacity: The people signing the contract must have the legal right to do so. That means they’re of legal age, mentally capable, and authorized to sign if they’re acting on behalf of a business.

6. Legal purpose: The contract must be for something legal. If it involves something prohibited by law, it won’t hold up—whether it’s electronic or not.

7. Electronic Signature
This is what makes it official. It can be as simple as typing your name, drawing your signature, or clicking a button—depending on the platform. Tools like DocuSign or Adobe Sign ensure that the signature is secure and legally recognized.

8. Audit Trail: Most electronic contracts come with a built-in record of activity. You’ll see who opened, edited, or signed the document and when. This adds a layer of transparency and helps prevent disputes later.

An audit trail is especially useful during electronic contract signing, as it helps prove when and how parties consented to the terms.

What are the types of electronic contracts?

Electronic contracts come in several forms, each designed to suit different types of transactions and user experiences:

1. Clickwrap agreements: Users click “I Accept” or “I Agree” to accept terms and conditions before proceeding, common in software downloads or website usage.
2. Browsewrap agreements: Terms are accessible on a website but do not require explicit agreement. While convenient, they are often considered less enforceable than clickwrap agreements.
3. Scroll wrap agreements: Users must scroll through the terms before agreeing, often used to encourage review and acceptance of specific terms.
4. Sign-in wrap Agreements: Users implicitly agree to terms by signing in or creating an account, with the terms linked nearby. Enforceability depends on how visible and accessible the terms are.

What are the advantages of electronic contracts?

For businesses looking to enhance their digital processes, AI-powered contract management offers advanced features such as automated drafting and analysis.

How do you create an electronic contract?

To create a legally sound e-contract, businesses generally follow these steps:

1. Draft and review terms: Begin with a draft that clearly defines the terms, obligations, and rights of both parties.
2. Negotiate terms: E-contracts may go through a negotiation phase where both parties can make amendments to proposed clauses.
3. Get approval and signatures: Once terms are agreed upon, parties provide electronic signatures through a secure platform.
4. Fulfill obligations: Each party follows through on their commitments as outlined in the contract.
5. Analyze and optimize: Monitor the contract’s outcomes and adjust future contracts based on performance.
6. Review for renewal or termination: At the contract’s end, decide if it will be renewed, terminated, or renegotiated.

Electronic contracts have changed the way businesses manage agreements, offering an efficient, cost-effective, and environmentally friendly approach to contract management in today’s digital age.

Manage electronic contracts with CLM

Electronic contracts reduces paperwork. No printing, no scanning, just fast, secure agreements that you can create, share, and sign online. With HyperStart contract signing software, it’s easy to make the shift.

Thanks to integrations with trusted tools like DocuSign, Adobe Sign, Dropbox Sign, etc you can collect legally valid signatures without delays. Whether you’re closing deals or managing internal approvals, HyperStart helps you keep things moving—safely, efficiently, and with full compliance. Want to see how it works? Book a quick demo today.