E-commerce: Electronic Contracts and Signatures

Electronic transactions in business have been recognized as legitimate and legally enforceable as any document in written form. According to federal Electronic Signatures in Global and International Commerce Act (ESGICA), electronic contracts and signatures are considered valid and recognized by courts. However, not all agreements can be transformed into an online version such as court orders, divorce, adoption, last will, and other sensitive dealing.

Electronic signatures in online contracts are now legally enforceable and are considered as legal as any document in hard copy, according to corporate lawyers.

Under Electronic Signatures in Global and International Commerce Act (ESGICA), e-contracts are legally valid and will be recognized by courts. With the passage of this law, many companies from the industry of finances, household services, insurance, and online retail have enjoyed easier and faster processing of transactions.

Also, this improves the business to business transactions by allowing companies to conduct transactions and agreements entirely on the web. With this result, entrepreneurs can save time and money in business operation.

In an estimate, electronic contracts allow companies to eliminate paperwork fees, thus saving thousands of dollars every year.

Procedures in Drafting Electronic Contract

Because electronic transactions do not require a paper or ink, a person should write a contract in his computer and send it online to another individual. The receiver then will return the document with his signature.

Meanwhile, an e-transaction may also be in the form of “Click to Agree” which is used together with a downloaded software. For example, a company send a “Click to Agree” contract to a client; the latter will then click the “I Agree” button before any business agreement can proceed.

After clicking the “I Agree” button, the next step is writing one’s signature. But since signing a contract with the use of a pen is not possible, people should have to resort with pasting the scanned version of their signatures.

Another way of signing an electronic contract is using the cryptographic scrambling technology that works by splitting a digital message into several parts. The receiver of the contract will then have to beak the mathematical formula (or unscramble the message) to complete the contract.

According to security experts, cryptographic contracts provide more security and reliability compared to other forms of electronic signatures. With this consideration, many companies favour cryptography and consider this as the most secure way of signing electronic agreement from the Internet.

Meanwhile, another reliable method of verifying e-signature involves digitally recording one’s fingerprint. However, there should be a special hardware that can electronically record fingerprints.

While the law validates most e-contracts, some agreements are considered too sensitive and are not legally enforceable if transformed electronically.

• product recall
• court order
• last will and testamentary trusts
• notice of cancellation of a utility service such as water, electricity, phone, etc.
• legal documents related to divorce, adoption, and other family matters


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