How to Legally Sign a Business Contract

How do parties legally sign a contract? Do contracts need to be signed in person? Are electronic signature solutions legally binding? The act signing of contracts was much more straightforward before the rise in technology. But the options available now are so much more advantageous than the traditional methods. Read on to find out ways to legally sign contracts and the pros and cons of each method.

1. Pen and paper. This is the old school form of signing a contract. All parties are present in the room and sign the contract in ink. Or one party signs the contract and then physically delivers it to the other party for signature. For contracts with few parties, this might an alternative to consider, but given the rise and affordability of technology, it is becoming much less common. Although there are some legal documents that must be physically signed in person (i.e. wills) it is not necessary for the vast majority of legal contracts.

Pros: no cost.

Cons: inefficient (the document must be printed, signed, photocopied and circulated); the physical agreement needs to be filed/stored for safekeeping; the signed agreement can be lost; if a signature is missed, the person needs to be located to physically sign the contract again.

2. PDF copies. Often parties will sign documents at their office or at home and then circulate the signature pages by email with the signature page as a PDF. This does not require the parties to be in the same room, but still requires parties to print out the page, sign the document, scan it and then circulate it by email with an attached PDF copy.

If a contract is signed in this manner, it is recommended that the contract have a counterparts provision. This clause is usually found near the end of the contract and permits the parties to each sign an individual copy which when assembled together creates a fully signed document. It also allows parties to circulate signature pages by PDF.

Pros: no cost; there is an electronic record of the signature (if it is circulated by email).

Cons: inefficient (the document must be printed, signed, scanned and circulated); the physical agreement needs to be filed/stored for safekeeping;

3. E-signature. There are currently some great programs that allow parties to electronically sign contracts with the click of a button. Nothing needs to be printed and the parties certainly do not need to be in the same room. Examples of these programs are DocuSign, HelloSign and Dubsado. E-signatures using programs such as these are legally enforceable in Canada.

As mentioned in the PDF option outlined above, if you use e-signature programs to sign contracts, ensure that there is a counterparts provision in the contract.

Pros: convenient and efficient (no need to print, sign, scan and circulate the agreement; the program does that for you); some programs allow your signed document to be  integrated with cloud storage services.

Cons: fee for service, some clients may be hesitant to sign electronically.

How do you prefer to sign your legal contracts? What programs do you use for e-signature? Let me know in the comments!

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