I’ve always considered entrepreneurs who work in the ‘Cloud’ (i.e., using Internet-based resources) to be visionaries and life style designers. By most accounts, this is how much business will be done in the future. Still, many business owners have been befuddled as to how to do some business tasks via the Internet. One such task is signing contracts. For instance, I strongly believe that when you hire virtual assistants for your business, you should sign contracts that outline each party’s responsibility. Plus, businesses that serve a national or even global clientèle find it a challenge to sign a contract with those clients. Do they fax the documents back and forth? Sign it and scan it and then email it?
The new online way of signing contracts
While both of those are options, more and more businesses are finding that an e-contract is as good as the old-fashioned physical contract. An e-contract is simply one which takes place entirely in Cyberspace. You agree to terms via e-mail and sign it electronically.
Here’s what you need to know about legal documents in the Internet age: A contract is a contract. As far as the legal system is concerned, it doesn’t matter if it was created in a lawyer’s office or on the Internet. It does not matter if it’s signed with ink or online. In fact, to be perfectly honest, it does not matter if it’s signed at all. Most judges in the nation will tell you that an oral contract is as binding as a written one; it just needs to be proven in court. All that matters is that there is a meeting of the minds. If you agree to sell your TV to a friend for $50 and just shake hands on it, that is a binding contract.
It’s difficult to prove the validity of a contract when it’s not written down
Bringing this into the digital age, this means that if you and John Smith agree to something via email, that is a binding contract. But again, the challenge is to prove whether or not there was a true meeting of the minds between you and Mr. Smith.
So, yes, you can create a perfectly legal contract between yourself and virtual assistants that is entirely Internet based. The same holds true for contracts between you and clients (if you can convince them of the legitimacy of the contract, that is).
The signing of the E-SIGN Law
Although some people say it was unnecessary, President Clinton drove this point home even harder in 2000 when he signed the Electronic Signatures in Global and National Commerce Act (otherwise known as E-SIGN). The bill stated clearly that electronic contracts have the same legal status at a contract created in hard-copy form.
A contract is a contract, even if it was created online or signed electronically. So says the E-SIGN law. The key, again, is that there must be a meeting of the mind–and if you ever go to court, you must be able to prove that there was a meeting of the minds. This means that when you create a Cloud-based contract, it’s essential that you convey your intentions clearly, that the virtual assistant’s or client’s intentions be expressed clearly, and that both of you acknowledge that you understand what is in the contract. There is no room for careless suggestions or working. If you ever have to go to court to have the contract enforced (or to show that you have not defaulted on it), the criteria that you will be expected to prove is “offer, acceptance and consideration.” That is, you must be able to show what you offered to the other party, that they accepted it, and that the exchange of services or money / property actually began (the ‘consideration’).
Suggestions for creating a virtual contract that will be considered legally legitimate by the courts:
- Model your online contract after an offline document. Even though legally it’s not required that your online contract look like a traditional one, psychologically, it gives the contract more credibility. Also, in the contract, mention the legal jurisdiction where the contract was made.
- State the terms of your contract clearly. Because you’re running a Cloud-based business, you’ll need to use clearer language and images than in other contracts.
- Your contract should contain your offer of service, the acceptance of this offer, the services or products that you agree you will provide, and the intention of both parties to enter into a legal relationship.
An important point to consider when signing cloud-based contracts
You must be able to prove that you had a contract, or a “meeting of the minds,” with the other party. There are two ways you can do this. One is through a “digital signature.” There are several major online sites that provide a digital signature service. This simply means that you send the contract to them and they send it to the other party. The other party then sends it back. The digital signature service then acts as the mediary and puts its stamp on it to prove that both parties have agreed to it. The major digital signature sites are: www.Tractis.com , www.echosign.com, www.RightSignature.com and www.DocuSign.com.
Legal Disclaimer: As always, remember that I am not an attorney, and you should consult one for advice regarding contracts.
Questions for you:
- Would you feel safe about signing a contract online, or do you feel like you have to have a paper version?
- Do you think people take an online contract as seriously as they do a regular one?