The murky world of e-contracts

Almost a year ago I wrote about e-signatures. Now e-contracts are on the rise, with some law firms jumping on board. But in an employment and contract law context, nothing has really been advanced or become the norm (yet!) Let’s examine the implications of having electronic employment contracts.


Why e-contracts?

As the world becomes more environmentally aware and motivated to look after the earth, people have been looking for ways to reduce waste on resources, particularly the amount of paper used. Law firms in particular are the perfect culprit as they use about 10 trees worth of paper just for their day to day work!

Several law firms have now gone paperless, but as I said in the introduction, there isn’t a norm yet. Most firms are still relying on printed out employment contracts for their staff, so there is definitely an opportunity to jump on board by moving storage to the cloud.

Why do they work?

The good thing about e-contracts is they can be saved on a database for easy access. You no longer need to print it off, sign it, send it back and then have it filed in a thick binder folder and put on a shelf with 100 others. And it only takes a few minutes to create if you’re using a precedent software.

How would it work?

For employment contracts specifically, they can display an “I agree” option instead of a signature option, similar to a websites Terms and Conditions. This, like regular contracts, can form the basis of a binding agreement for the individual to work for their new employer. Alternatively, an electronic signature can be utilised. This is something that legislation in Europe has acknowledged can constitute an enforceable contract.

Sounds great, right?

So what can go wrong?

What happens when your server crashes or you suddenly lose all of your data? If you lose an electronic employment contract, are they void pending creation of a new one? If they’re never recovered, you’ll have to work pretty hard to redraft them all, and that’s not even taking into account pay, tax, superannuation and other things that are dependent on the contract being in force.

What happens if your server is hacked and your e-contracts are altered? Contracts personally identify the parties that have signed, so their details are left open to abuse or the information/terms can be secretly altered, causing implications in the future. Once you regain control of your server, you’ll be frantic trying to ensure everything is the way it’s meant to, and if things go wrong, who’s responsible for the damage? Do we need to implement new legislation specifically addressing the use of electronic contracts?


Electronic employment contracts are workable, but they require some special measures to make sure they are safeguarded from any trouble such as the situations described above.

My suggestion to employers looking to implement them would be to up the anti on the system protection and develop some kind of “lock” feature on every document, not permitting any edits to be made.

Can you think of anything else? Let me hear it in the comments.


The [Pre]Lawyer in Black

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