The Art of Contract Signing: Sealing the Deal with Ease
Is signing the contract the easiest or hardest step of the contract lifecycle? Which signatures are available and how do you choose them? How do we make signing convenient for everybody?
On one hand, signing a contract may be considered the easiest step as it is usually the final step of the process. On the other hand, signing the contract can also be considered the hardest step in some cases. If the parties have been unable to reach an agreement on certain terms or if there are last-minute changes to the document, the process of finalising and signing the contract can become difficult and time-consuming. If there are multiple signatories involved, coordinating the signing process and ensuring that all parties have signed can also be challenging.
In this fourth post of our Contract Lifecycle Management (CLM) series, we will explore all of these topics and highlight some ways you can seal your deals with ease.
Understanding the Importance of Contract Signing
Contract signing is arguably the most crucial step of the deal. It’s where the parties put pen to paper (or click their mice a few times) and make the deal final.
Contract signing means that the parties are agreeing to be legally bound by the terms of the contract. To give some examples, this could mean, purchasing some goods, buying a house, or becoming employed, to name a few.
It’s then crucial that the signing process is managed well, and no party gets left behind or slips through the cracks.
Contract Signing: Easiest or Hardest Step?
We’ve agreed that contract signing is the most critical step of the contract.
But is it the easiest, or hardest step?
Some would say that it’s the easiest step. This is because now all the complex work is complete. The contract is written in a way both parties are happy with, all clauses have been approved, and the lawyer review is complete. Now there’s just one step left to make it all official - signing.
However, it can then start to get problematic when you start thinking about how to sign. Especially when there are multiple signers or international parties involved.
Here in Estonia, the typical way would be to send over a container signed digitally in the DigiDoc application via email and to go back and forth with signing from there. Some others may prefer the traditional paper and pen, or an electronic signing platform.
So it can get quite complicated to decide how to sign, and what method to use to sign the contract. It can get overwhelming and difficult quite quickly.
So - let’s break it down.
Types of Signatures Available
We mentioned above there are various types of signatures available, but let’s break down what they all actually mean.
A wet ink signature (or, paper and pen) is pretty self-explanatory. But this is when the parties will sit and sign a physical paper. This method has its advantages, namely that if the signing parties are all in a room together, and witness each other signing then it is verifiable and definite that they have signed.
However, this method gets a little convoluted particularly if you have parties signing in different countries. Then, you may have to use a postal service to send the document, which is very time-consuming, and costs a lot in terms of fuel and carbon emissions. Plus, sending sensitive documents over the post puts the contract at risk of getting lost or intercepted.
Moving on to the digital forms of signature. Did you know that electronic signatures (e-signatures) and digital signatures are actually different things?
An e-signature is any electronic symbol, or process associated with a contract that the interested party intends to sign. The intent to sign is its primary purpose. It can be some form of electronic authorisation such as clicking a mouse somewhere in or on the electronic document.
A digital signature is a unique digital characteristic that comes with a signing certificate. This certificate verifies the document’s signature and uniquely identifies and links the signer and the document together. The digital signature demonstrates the document's authenticity and source, ensures that no changes were made to the document after signing, and confirms the signer's identity.
They are both convenient forms of signing, as they typically only take a few clicks to do on a computer. They are also great for contracts that need signing by parties across different countries. There’s no need to send the contracts over the post, either they are sent via email, or an e-signature platform is used to send invitations out.
Choosing the Right Signature
Above, we talked about the various different types of signatures you can use. But how do you choose the right one for your contract?
Well, it comes to two things: one, what is legally valid in the jurisdiction the contract covers, and two, the type of contract.
Handwritten signatures are typically valid for all jurisdictions and types of contracts. (but do check with a lawyer first).
However, due to their technical nature, digital signatures have some extra rules and regulations surrounding them.
In the EU, electronic and digital signatures are covered by the eIDAS (electronic IDentification, Authentication and trust Services) regulations. These regulations set out three levels of digital signatures.
- Simple Electronic Signatures are ones that require little verification, such as signing through email.
- Advanced Electronic Signatures reliably identify the signer and make a unique link between the signature and the signer.
- Qualified Electronic Signatures are the highest level of signature. They are equivalent to a handwritten signature, as they are backed with a form of government ID and verified by a trust service provider.
It is critical to check with a lawyer, what signature types your specific jurisdiction in the EU allows for certain types of contracts to be valid. For example, in Estonia, only Qualified Electronic Signatures may be used for employment contracts.
Tips for Easier Contract Signing
As we mentioned above, making the contract signing process convenient and easy for all parties can be difficult. However, with these tips, we hope to share some strategies to make the contract signing process the easiest, not the hardest step of the process.
Tip 1: Communication
Having good communication between you and your signing parties, and stakeholders is crucial. Good communication ensures that everyone is on the same page regarding when the contract has been approved. It also ensures that everyone knows how they will be signing the contract, and with what online platform, if you’re using one.
Tip 2: Establish Clear Processes
Tools and systems are only as good as the processes they’re built around. Think about who owns what part of the contract process in your company. Who are the people that need to be in the loop on the signing process? Are there some people that are critical to the success of the signing, but aren’t necessarily signers themselves? Who will own the processes as a whole? Before using any kind of tool, it’s important to have an idea about these things.
Tip 3: Use a Digital Signing Tool
When appropriate, using a digital tool to sign and manage contracts can save a lot of time and stress. For example, within Agrello you can easily create your documents. Then you can invite your parties to sign. They will receive a handy email in their inboxes and be able to sign quickly and easily. In Agrello there are various options. You can sign with Smart-ID in Estonia, Latvia, and Lithuania and Mobile-ID in Estonia and Lithuania. ID-card is also an option for Baltics, and also Croatia and Belgium. In addition, you have the option for Agrello signature. This is a digital signature, which is linked to your email ID. After signing, you will be able to do some neat stuff, like setting reminders (but that’s for our next part).
Tip 4: Integrate with Other Systems
It’s important in today’s digital world that systems are all connected. Especially as it saves a lot of time and manual work. Agrello has numerous connections to other apps, using Zapier. For example, you can create a Zap that automatically sends your signed contracts to a Google Drive folder.
Contract signing doesn’t have to be the hardest step of the contract lifecycle. If you communicate well with your parties, choose the right signing method for your contract, and implement digital tools effectively it can actually become the easiest part.
In the next instalment of this series, we will look at post-signing contract administration, and how to streamline these processes to ensure you’re protecting your interests and mitigating risks.