Are you a freelancer working from home? Or you recruit staff remotely? If YES, here is how to make a contract you made online legally binding in 6 easy steps.

The internet has continued to make communication very easy and has also turned the world into a global village. Some years back, for business owners to enter into a legally binding business contract; they had to meet each other one on one to sign a physical paper, only then will the contract be considered to be legally binding.

But nowadays with the help of the internet companies, business owners can now enter into a legal contract online and the contract becomes binding on all parties of the contract. This is also called an electronic contract or and e-contract and it is a contract or agreement which is created and signed in an electronic form without need for a paper or a hard copy.

In this write up, I will discuss features of an electronic contract, and also steps to make an electronic and make it legally binding. At the end of this article, you should be able to note all the necessary steps needed to make a legal contract via the internet.

5 Features of an Online Contract

An electronic contract contains all the elements of an offline contract including one distinct feature; and the primary elements of a contract before it can be legally binding are:

  • Offer-: If you are the party drafting the contract, then you are the one making the offer; but if the other party is drafting, then the offer is being made to you. Offer here means something of value which you are willing to offer the other party in exchange for a consideration. It is the basis of any contract. For instance, if you have a laptop for sale, laptop is the offer.
  • Acceptance-: Another element that has to be in place before a contract is legally binding is acceptance; if you make the offer, it is left for the other party to accept the offer. When there is no acceptance, then the contract is not said to be valid.

Still using the instance of a laptop for sale, when you make the offer to your friend that you have a used laptop to sale for the price of $500, if your friend accepts to buy the laptop from you at the aforementioned price, then acceptance has been made.

  • Consideration-: This is a thing of value offered by the party that made the acceptance, and it is always in the form of monetary value for exchange or similar product. If the party that accepts to purchase the laptop at the price of $500 makes the payment, then consideration has been fulfilled.
  • Intention to Enjoy into Legal Contract-: For a contract to be legally binding, there has to be an intention to contract; for instance, the party with whom you enter into a contract must be of legal age to enter into a contract. If the person is a minor, it automatically renders the contract null and void.
  • Electronic Signatures-: There should be an electronic signature for an electronic contract to be legally binding. The party making the offer has to sign it and mail it to the party making the acceptance; the other party has to sign and mail it back as a sign of acceptance. There are some softwares for making electronic signatures, when that is not available, then the document can be printed out, signed and sent back to the other party.

How to Make a Contract Online Legally Binding in 6 Easy Steps

1. Ask for Confirmation of Age-: This is the first step you have to take when making an electronic contract; since you aren’t meeting the other party one on one, then you have to ask for proof of age for him or her. Failure to do so renders the contract invalid if the other party is a minor. You can ask for a valid identity card like a driver’s license or an international passport.

2. Draw up the Terms of the Contract-: If you are the party making the offer, you have to be the one to draw up the terms of the contract; you have to explicitly give details of the services and product you have to offer including the names of the parties to the contract.

If there is any defect in the product or any delay in the execution of the services you are offering, also include them in the terms of your offer, because failure to do so can give the other party a locus standi to institute an action against you.

3. Include Your Consideration-: Include in the terms of the offer, the consideration or price that you are willing to accept for the offer you are making.

4. Include Conditions for Termination of the Contract-: A contract is usually terminated after all the parties of filled the terms of the contracts; but you should also include other clauses by which the contract can be terminated.

For instance, you can include that the contract will be terminated if the other party fails to fulfil his side of the contract, that is consideration, or if you sense any deviation from the terms of the contract, it will be a valid ground terminations. After this, you are expected to sign and send the contract via email to the other party.

5. Acceptance by the Other Party-: Mailing the terms of the contracts to the other party does not make it a valid contract yet; the other party is expected to read through the terms of the contract, and if he or she is okay with the terms of the contract, he makes his acceptance know. A popular sign of acceptance is if the other party signs his signature and mails the terms of contract back to the party A, or if he or she explicitly states the acceptance of the offer.

At this stage, the contract is considered to be legal and binding on both parties. Always ensure that you have a physical copy or print out of complete contract just in case; though the original will always remain in your email.