Electronic execution clause: Overview, definition and example
What is an electronic execution clause?
An electronic execution clause is a provision in a contract that allows for the signing of the agreement through electronic means rather than traditional handwritten signatures. This clause confirms that electronic signatures are legally valid and binding, and it specifies that both parties agree to accept them in place of physical signatures. With the rise of digital contracts and remote transactions, this clause has become increasingly common in business agreements, providing a faster and more efficient way to execute contracts.
Why is an electronic execution clause important?
An electronic execution clause is important because it streamlines the process of finalizing contracts, especially in remote or digital transactions. It eliminates the need for physical signatures, reducing delays and making it easier for businesses to complete agreements quickly. This is particularly useful for companies that engage in cross-border transactions or those that operate in industries where speed and efficiency are crucial. It also helps businesses stay compliant with digital signature laws, ensuring that the contract is legally enforceable even when signed electronically.
Understanding an electronic execution clause through an example
Imagine a software company that enters into a licensing agreement with a client located overseas. The agreement includes an electronic execution clause, allowing both parties to sign the contract digitally via a secure platform, rather than needing to send physical copies back and forth.
When the client is ready to sign, they receive an email with the contract and a link to an e-signature platform. After reviewing the terms, they sign the document electronically. The software company also signs digitally. The contract is then considered fully executed and legally binding, despite the parties never physically meeting or exchanging hard copies.
Example of an electronic execution clause
Here’s how an electronic execution clause might look in a contract:
“The parties agree that this Agreement may be executed by electronic signature, and such signatures shall have the same legal effect as original handwritten signatures. The execution of this Agreement by electronic means shall be deemed binding and enforceable.”
Conclusion
An electronic execution clause is essential in modern contracts, ensuring that digital signatures are recognized as legally valid and binding. It simplifies the process of signing contracts, making it easier for businesses to finalize agreements quickly and efficiently, without the need for physical paperwork. By including this clause, businesses can ensure that their contracts remain enforceable while embracing the convenience of electronic transactions.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.