Electronic Business Contracts - Are They Valid?

 Posted on May 16, 2017 in Breach of Contract

Long gone are the days of doing everything on paper. Pictures and important documents are stored in the cloud. People often connect more with the people on their social media account than their neighbors. Even business contracts are sent and signed digitally. Are digital contracts an effective or legal option for businesses though? Can they stand up in the face of business litigation, or are digital contracts a lawsuit waiting to happen?

Uniform Electronic Transaction Act

In 1999, a total of 47 states adopted the Uniform Electronic Act, which indicates electronic signatures may be considered just as valid and legally binding as a manual one. The state of Illinois did not accept this law, but many digital signatures are considered valid. However, it is important to note that electronic signatures on negotiable instruments are not considered valid in the state of Illinois. Further, there may be additional restrictions placed on the validity of a specific contract or signature.

Advantages and Disadvantages of Electronic Contracts

One of the biggest benefits of electronic contracts is that they offer an easy way to send, receive, and store important business and employment contracts. Electronic signatures can also facilitate faster processing of certain documents. However, electronic contracts also have potential disadvantages - some of which are significant.

By far, the most concerning problem of electronic contracts in Illinois is the way they leave room for litigation. This risk is present for many reasons, but the lack of universal standards within the state is one of the most influential. Thankfully, a judge cannot simply deem a signature invalid because it was obtained electronically. Instead, they may consider some of the following aspects:

• If all elements of a contract were present (offer, consent, acceptance);
• If both parties entered the contract willfully;
• The method or manner through which the signature was obtained; and,
• Any other relevant factors to the case.

Contact Our DuPage County Business Law Attorneys

If you are a business owner who wishes to use electronic contracts in any aspect of your business, it is important that you discuss this desire with an experienced business law attorney. Not only can this prevent a costly mistake, but it can also help ensure your company is compliant in other areas of Illinois business law.

Stock, Carlson & Asso. LLC is dedicated to the future of your company. Dedicated and experienced, we can carefully review your current legal processes to determine if there are any issues that may place your company at risk. Schedule your consultation with our DuPage County business law attorneys to learn more. Call 630-665-2500 today.

Sources:

http://www.uniformlaws.org/Act.aspx?title=Electronic%20Transactions%20Act

http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=89&ChapterID=2