What is a Contract?
A contract is a legally binding agreement between two or more parties, delineating their rights, obligations and expectations.
Understanding Contracts: For a contract to be valid, it must include elements such as:
- Offer: A proposal made by one party to another party to enter into a contract.
- Acceptance: The agreement by the other party to accept the offer.
- Consideration: The exchange of something of value between the parties.
- Mutual agreement: The parties must both agree to the terms of the contract.
- Capacity: The parties must have the legal ability to enter into a contract.
These fundamental components ensure that contracts are enforceable and protect the interests of all parties involved.
What is Contract Signing?
Contract signing is the act of formally agreeing to the terms and conditions outlined in a contract by putting your signature on the document. It signifies acceptance and creates a legally binding agreement between the parties involved.
Why is it important to sign a Contract?
The process of contract signing is more nuanced than simply putting pen to paper. It encompasses various methods of signing, each with its own considerations to ponder beforehand.
Also: Download our eSign guidebook
Contract signing isn't just a formality but is a legal shield and trust builder. By signing, both parties signal their intent to be bound, making the agreement enforceable. In disputes, a signed contract empowers you to seek justice. Beyond legalities, it fosters trust and clarity, ensuring everyone's on the same page. So, while a handshake might suffice for casual deals, for anything with legal or financial weight, a signed contract is crucial.
Contract Signing with CLM:
Contract Lifecycle Management (CLM) refers to the process of managing contracts from initiation through execution to renewal or termination. CLM software automates tasks, tracks key milestones and centralizes contract data.
Understanding Contract Lifecycle Management (CLM): Key stages of CLM includes:
- Contract Creation: Drafting contracts with predefined templates or custom clauses to reflect the terms of the agreement.
- Negotiation: Collaborating with stakeholders to negotiate terms, revisions and amendments before finalizing the contract.
- Approval: Obtaining approval from authorized parties, such as legal, procurement, or senior management to ensure compliance with internal policies.
- Execution: Signing the contract electronically or manually with appropriate authentication and documentation.
- Obligations Management: Monitoring contract performance, milestones and deadlines to ensure compliance with terms and obligations.
- Renewal or Termination: Evaluating contract performance and determining whether to renew, terminate or renegotiate the contract based on predefined criteria.
In today's digital age, Contract Lifecycle Management (CLM)Software like Contractzy offer a centralized repository for contracts, automated workflows and e-signatures.
Steps to Signing a Contract
- Contract Review: Thoroughly reviewing your contract before signing is absolutely crucial. Signing a contract binds you legally to its terms, so ignorance isn't an excuse.
- Negotiation: Do not settle for the terms that don't fully align with your needs. Engage in negotiations with the other party to address any discrepancies, clarify contractual terms and reach a mutually acceptable agreement.
- Signatory authority: After finalizing contractual terms with the counterparty, ensure you have the legal power to bind your business to the agreement. This authorization, known as Signatory Authority is crucial to avoid potential legal complications.
Sign the contract in accordance with the agreed-upon terms and conditions, following appropriate signing protocols and authentication methods.
Check out Contractzy’s Digital Signature feature.
- Document Retention: Maintain copies of the signed contract for your records both physically and electronically.
- Organize and store: Choose a secure and easily accessible location to store your copies, like a dedicated folder or cloud storage.
- Meet deadlines: Be mindful of any important dates mentioned in the contract, like payment deadlines or deliverables. Mark them on your calendar and set reminders to ensure timely compliance.
- Track progress: Depending on the nature of the contract, you may need to track your progress towards fulfilling your obligations. Maintain clear records of your actions and communication.
What are the different ways of signing a Contract?
Traditional (wet ink) signatures:
- In-person: This is the classic method where both parties physically sign the same paper copy of the contract with a pen. It's still commonly used for important contracts or when parties are meeting in person.
- E-signing platforms: These services allow you to sign contracts electronically from any device. You type or upload your signature, and the platform securely attaches it to the document.
- Digital signatures: These create a unique, encrypted "fingerprint" linked to your identity and the document. They offer the highest level of security and are often used for high-value contracts.
Also read: Our blog on Wet Signatures Vs. Electronic Signatures
Useful Signing Features of Contractzy:
- Sequential Signing or Parallel Signing: Contractzy offers both parallel and sequential signing for multi-party contracts. Sign simultaneously or in a specific order meeting your unique workflow needs.
- Contract Signing Reminders: Schedule reminders well in advance of signing deadlines with Contractzy’s built-in reminder feature that automatically notify parties when action is needed.
- Bulk Sign: Sign up to 10 contracts at once using Contractzy’s Digital Signature Certificates (DSC) and process large volume of contracts easily.
- Signing Insights: Get valuable insights into the signing process including completion status, timestamps, and audit trails.
Sign Contracts faster with Contractzy:
Signing a contract marks the final step in a careful process of setting clear terms, protecting interests, and building trust. Contractzy makes this process smoother by paying attention to detail throughout the contract lifecycle, from negotiation to execution and beyond; meet obligations and lay the ground for thriving partnerships.
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