Electronic contracts are lawful, binding, and a constant presence in our lives. At one point, contracts required
wet ink signatures, or special stamps, or other formalities. In the modern era (or at least, in modern countries), these formalities are dispensed with in favour of ease of doing business. In Ontario, some of these rules are formalized through 23 year old legislation: the Electronic Commerce Act, 2000. Similar laws exist elsewhere to enable online business. And yet, too many people are still signing agreements. Sometimes they sign them using Docusign or similar tools, where they're electronically mimicking the wet ink signature that's not needed. Lawyers sometimes encourage this, often because of a cultural belief in formality that might make people feel better about the whole thing. We can do better.
Do What The Tech Giants Do
One-click signatures are all over the place. It's how users sign up for the world's largest tech platforms, like Facebook or opening a Google account. They don't demand that users send them a PDF that they've electronically signed. The contracts are very much binding upon the people who assent to them. Almost all of the time, people are wasting their time if they're not following this pattern.
A Multi-billion Dollar Industry Of Wasted Time
Docusign and others have built multi-billion dollar businesses on the cultural belief in digital signatures as some sort of requirement. In my ten years of lawyer work I have yet to see a single example of anyone challenging a signature. There's no requirement, and there's no value. There's actually negative value because it's cumbersome for everyone to deal with. Although there really are reasons for signing using platforms like Docusign, these reasons are almost never why it's being used, and lawyers can easily advise their clients on the rare occasions when using such a platform would be a requirement or a good idea. But for almost every case, and for basically every relevant case for startups, using a signing platform that mimics signatures is just taking attention and time away from growing their business.
A New Platform
Companies ought to be using one-click signing. An order form can have the customer click
I Agree To The Legal Terms, with the terms hyperlinked to the contract. The assent to this contract can be recorded in a database, associated with the user's account, or whatever follow-on actions are required. There's no need to generate a signed PDF and associate that with the deal or contract. Independent contractors, NDAs, and so many other kinds of standard agreements for startups can be changed to one-click button-based interfaces. Contracting party information can be obtained through simple forms. I think there's a big market out there for a company that makes this tool as easy as possible, and explains how to add new contract templates into the system. This is particularly compelling for documents that require multiple signatures.
A software service for managing one-click agreements ought to help people to record metadata about the signing process, the version of the contract signed (since they're often updated by replacing the document at a URL, rather than pointing to a new URL with the version code), and other aspects of the contract. They might provide hosting of the contracts too. If the software was easy enough, and helped with dealmaking, I would think the market for this would be similar to the market for form generation tools (which is surprisingly robust, with many companies like Typeform, competing in the forms-as-a-service market).
Getting Over The Culture Of Signatures
There's a strong culture of wanting to see signatures. People find it pleasing to the eye. But that's not a good reason to inconvenience people by requiring them to figure out how to make a digital mimic of their signature on their computer, or, even worse, print out a document, sign it, scan it, and send it. The losses to this useless process are surely in the many millions per year in Canada alone. This process also undoubtedly causes at least a few people to not say yes to a deal that someone wants them to sign. Making deals easier to sign, and easier to record, is a way to cut costs and improve dealmaking speed.
Lawyers And Their Templates
Lawyers can assist their clients in rewriting the documents they produce with execution in mind. This means converting to one-click agreements. This doesn't even require a platform to do, since the agreements can simply be referenced the way it is common today to reference end user license agreements (also called
terms and conditions,