Why One Must Use Electronic Signature for Contracts

19th June - Why one must use electronic signature for contracts


An E-Signature is an encoded signature embedded on an electronic document, instead of printing it out and putting a physical signature on it. It symbolises the person’s intent to affix his sign on the said document. An e-signature is different from a digital signature, which is a mode of encrypting an electronic document with a public key and a private key to ensure confidentiality and authenticity. E-signatures do not use complicated encryptions, but only affix a digital form of signature indicating authentication of the document by the signing party.


  • Time Saving: The whole point of making e-contracts instead of offline contracts is to enable parties to communicate easily and save time spent in documentation. But if a real signature is to be affixed on the paper, it would require a print out, signature, and then scanning/faxing to send it to the other person; thus ruining the time saved in the primary electronic transactions. E-signature helps to overcome this hurdle, as the parties can affix the signature online and send it back right away. It is also easier to negotiate and amend terms in the final contract before signing.
  • Security: E-Signatures are created either with the help of online E-Sign services or using the company’s own website. These ensure confidentiality of the document, and prevents loss that may occur in actual transit. Online E-Sign services usually use high-security servers and encryptions to prevent outsider invasion into the databases.
  • Easier to close deals: From the view point of a business, the earlier the customer signs and submits the deal, the better. Absence of paperwork enable companies to close deals easily by not letting long-drawn time frames instil second thoughts in the customers’ minds, negating all the canvassing by sales personnel.
  • Flexibility and Mobility: Enables you to work on contracts and deals from anywhere and at any time; a contract can be signed even while you are in transit or at places with no immediate availability of stationary and print services. It allows mobility to business personnel assigned with the responsibility to close deals, and they can manage multiple contracts simultaneously without the risk of mixing up papers.
  • Cost Reduction: Lesser paperwork implies lesser amount of stationary and office supplies, and it does away with the need of storage space for registers and documents physically signed. The overall transaction is carried out through electronic means and there is no cost incurred in printing, posting, etc.
  • Convenience of Customers: Apart from the benefits directly accruing to the business, it also enables the customer to sign the document easily without much fuss, and makes it convenient for them to transact with the company. It in turn contributes to increased customer satisfaction, and enhances brand loyalty and goodwill.
  • Environment Factor: In addition to the business-financial benefits, not to forget that more and more e-transactions are encouraged today to reduce paperwork and conserve paper. While you are opting for e-contracts and e-signatures, you are doing your part for a better world.


  • Indian Contract Act: An agreement reached at by two competent parties, satisfying the requirements under the Act, is a valid contract, and it does not mandate a physical signature. The contract may be oral, written, or electronic.
  • Information technology Act: Specifically states that enforceability of a contract cannot be denied merely due to it being in an electronic form. E-contracts with e-signatures are as good as offline contracts.
  • Indian Evidence Act: Electronic records are admissible as evidence.



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