What is an electronic contract? Key benefits & how to create one

For legal, sales, operations, and procurement teams, paper-based agreements can be slow, error-prone, and costly. Today's organizations are moving toward digital-first workflows that offer faster turnaround times, greater visibility, and improved compliance.

This article explains how electronic contracts streamline workflows, cut expenses, and enhance security, transforming how modern businesses manage agreements.

Main takeaways from this article:

• Electronic contracts provide greater speed, compliance, and efficiency compared to traditional paper contracts, facilitating faster negotiations and finalizations.
• E-contracts are cost-effective by eliminating paper, mailing costs, and reducing administrative burdens.
• Enhanced security measures ensure the integrity and confidentiality of electronic contracts, protecting sensitive information.
• Using electronic contracts contributes to a positive environmental impact by reducing paper waste and conserving resources.

What are electronic contracts?

An electronic contract, or an e-contract, is a legally binding agreement formed electronically. It functions similarly to a traditional paper contract, outlining the rights and obligations of the involved parties. However, instead of physical signatures and paper copies, e-contracts utilize digital, wet signatures and secure online storage.

How e-contracts work

The process of e-contracts typically involves the following steps:

1. Drafting: The contract terms are drafted electronically, often leveraging pre-built templates or contract creation software.
2. Negotiation: Parties can use online platforms to collaborate to review, propose revisions, and finalize the contract terms.
3. Signing: Electronic signatures, which hold the same legal weight as traditional signatures, are used by all parties involved.
4. Storage and management: Secure e-storage platforms ensure safe and readily accessible copies of the contract for future reference.

New to electronic contracts? Learn how digital agreements fit into the broader contract lifecycle—from creation and collaboration to compliance and review. Download the contract lifecycle management guide

What are the benefits of electronic contracts?

E-contracts offer several significant advantages over paper-based agreements, making them a preferred choice for businesses today. Nearly 70% of organizations have adopted electronic signature solutions to sign contracts digitally, showing how prevalent e-signatures have become in 2025. 

Key benefits include:

• Increased speed and efficiency: No mailing or scanning—negotiations and approvals happen in real time.
• Greater cost-effectiveness: Eliminate expenses for printing, postage, and storage.
• Improved efficiency: Automated workflows reduce time spent on manual administrative tasks associated with contract management.
• Enhanced security measures: E-signatures are tamper-proof and traceable, with full audit trails.
• Positive environmental impact: Digital contracts reduce paper use and support sustainability goals.

How the benefits differ from electronic contracts vs. paper contracts

Speed

Paper contracts: Slower (mail, manual edits)

Electronic contracts: Real-time collaboration

Cost

Paper contracts: Printing, mailing, and storage

Electronic contracts: Minimal to no paper costs

Accessibility

Paper contracts: Physical storage required

Electronic contracts: Cloud-based, instant access

Security

Paper contracts: Risk of loss or tampering

Electronic contracts: Encrypted, with audit trails

Version control

Paper contracts: Manual tracking

Electronic contracts: Automated, searchable history

Sustainability

Paper contracts: High paper usage

Electronic contracts: Environmentally friendly

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Types of electronic signatures

E-signatures vary in their level of security and legal weight. Here are the three primary types:

Types of e-signatures explained and when to use each

Simple electronic signature (SES)

Security level: Low

When to use: Every day transactions or low-risk agreements

Advanced electronic signature (AES)

Security level: Moderate to high

When to use: Legal documents requiring authentication

Qualified electronic signature (QES)

Security level: Highest

When to use: Regulated industries, cross-border contracts

Common examples of electronic contracts

Electronic contracts are used in countless business and personal transactions. Here are some of the most common examples:

Business and sales agreements

• Sales contracts: Agreements for the purchase and sale of goods or services.
• Non-disclosure agreements (NDAs): Confidentiality agreements sent and signed digitally to protect sensitive information.
• Employment offer letters: New hire paperwork, including offer letters and policy acknowledgments, sent via email for electronic signature.

Online and consumer agreements

• Clickwrap agreements: When you click "I Agree" or check a box to accept the terms and conditions of a software installation or website service.
• Browsewrap agreements: Using a website or app implies consent to its terms of service, which are typically linked in the footer.
• Online purchases: Completing an e-commerce checkout process forms an electronic contract for the purchase.

Are electronic contracts legally binding?

The legality of electronic contracts has been a subject of debate in the past, but today, they are widely recognized as legally binding in many jurisdictions. The following legal frameworks have solidified the acceptance of e-contracts in the U.S. 

• Uniform Electronic Transactions Act (UETA): A widely adopted state law that establishes electronic records and signatures as legally valid evidence in court. UETA creates the legal foundation for e-contracts, covering their formation, validity, and preservation. 
• Electronic Signature in Global and International Commerce Act (ESIGN Act): This federal law makes electronic contracts as enforceable as paper ones, provided they meet basic requirements like being executed with the intent to sign. ESIGN has significantly strengthened e-contracts' legal standing across the U.S. Many countries have enacted similar laws or guidelines recognizing the legal validity of electronic contracts and signatures. This international consensus has further solidified the acceptance of e-contracts in the global business landscape.

How can businesses create an electronic contract?

Drawing up a secure and legally binding e-contract requires following specific steps. Here's detailed guidance on creating one:

1. Determine the contract's purpose

Creating a secure, legally binding e-contract starts with a clear purpose. Whether it's a sales agreement, service contract, or NDA, defining the contract's goals ensures alignment and sets the stage for success.

Consider the following key questions when determining the contract's purpose:

• What is the contract's primary goal?
• Who are the involved parties and their roles?
• What goods or services are being exchanged?
• Are there specific obligations or conditions?
• What outcomes are expected?

Clarifying these points helps tailor the contract to the transaction and ensures all parties understand their responsibilities.

2. Use a reliable template or tool

Transitioning to electronic contracts involves more than swapping paper for pixels. It also involves adopting a comprehensive system that redefines how agreements are approached. Using a template or a reliable system ensures consistency and compliance in every contract you create.

Several online platforms like DocJuris offer pre-built e-contract templates. With DocJuris, you can build contracts using pre-approved templates and clause libraries, ensuring every agreement follows internal standards and reduces the chance of inconsistent language or missing elements.

Looking for a better way to draft e-contracts? DocJuris helps legal and business teams create consistent, compliant contracts with structured templates, clause libraries, and collaborative editing tools. Explore our contract drafting software

3. Incorporate essential elements

A legally binding e-contract requires certain essential elements to be valid. These elements ensure that the agreement is clear, enforceable, and protects the interests of all parties involved.

Key elements to include in your e-contract and their purpose

• Identification of parties: Clearly defines who is bound by the contract
• Recitals: Explains the background and intent of the agreement
• Definitions: Clarifies key terms and technical language
• Terms and conditions: Outlines duties, rights, and legal provisions
• Representations & warranties: States facts and promises made by each party
• Covenants: Sets expectations for ongoing obligations
• Term and termination: Specifies the duration and how/when the contract ends
• Governing law & jurisdiction: Establishes which laws apply and where disputes will be settled
• Force majeure: Protects parties from events outside their control
• Entire agreement clause: Prevents outside agreements from affecting contract terms
• Notices: Details how parties will communicate formally
• Counterparts: Allows execution in multiple signed copies
• Signatures: Finalizes agreement with electronic or physical signatures

DocJuris automatically surfaces and standardizes these elements using your internal clause library, ensuring every e-contract is complete and legally sound to your company standards.

4. Select an e-signature solution

A reliable e-signature provider ensures the legal validity and security of your electronic contracts. Look for compliance with laws like the ESIGN Act and UETA, along with encryption, authentication, and audit trail features. 

The solution should be user-friendly, support advanced options like bulk signing, and integrate smoothly with your workflow. Responsive customer support is also key. Evaluating these factors helps ensure your contracts remain secure, compliant, and efficient.

5. Securely store and manage the contract

You must securely store and manage your electronic contracts throughout their lifecycle. Digital storage offers benefits like easy access, better organization, and strong security.

Choose a reliable cloud platform like DocJuris with advanced encryption to keep data safe from unauthorized access. You can also use permission settings to ensure that only the necessary people can access your contracts, adding another layer of protection.

DocJuris offers centralized, cloud-based contract storage with permission access settings, audit trails, and an easy way to see historical versions, giving teams full control without the manual overhead.

6. Regularly review and update

Regular reviews help keep electronic contracts aligned with regulations, business goals, and current terms. A set update schedule ensures changes are documented, increasing transparency and reducing risk. 

Digital tools with version control make it easy to track edits and gain stakeholder approval. DocJuris simplifies this with built-in collaboration and audit-ready change tracking.

Optimize the electronic contract process with DocJuris

Managing contract updates manually can be slow, error-prone, and difficult to scale. DocJuris offers a smarter way to handle redlines, reviews, and amendments, helping legal, procurement, operations, and sales teams move faster without sacrificing clarity or compliance.

Here's how DocJuris supports a more efficient contract workflow:

• AI-powered redlining: Apply standardized edits instantly using your playbooks, reducing manual effort and ensuring consistency.
• Instant document comparison: Quickly spot changes between contract versions, preventing errors and improving review accuracy.
• Real-time collaboration: Share contracts, leave comments, and manage revisions in one centralized platform—no more version chaos.
• Playbook enforcement: Ensure every clause aligns with your internal standards using customizable, pre-approved templates.
• Visibility and tracking: Keep all stakeholders aligned with a complete audit trail and built-in change history.

Whether you're reviewing vendor agreements or updating complex MSAs, DocJuris helps teams save time, reduce risk, and deliver faster results.

Request a demo now.

FAQs about electronic contracts

What is an electronic contract?

An electronic contract is a legally binding agreement created, signed, and stored in a digital format, without the need for paper documents or physical signatures.

Are electronic contracts legally binding?

Yes, electronic contracts are legally binding in most jurisdictions—including the U.S.—as long as they meet standard contract requirements and comply with laws like the ESIGN Act and UETA.

What are the different types of electronic contracts?

Common types of electronic contracts include clickwrap agreements, browsewrap agreements, digitally signed documents, and online purchase agreements.

What is an example of a digital contract?

A digital contract example is an online sales agreement where both parties sign electronically to finalize terms for the delivery of goods or services.