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Electronic vs Traditional Contract: What's the Right Choice for Your Business?

Phone plans, employment, loans, rentals, and purchases are just some of the things you'll need a contract for. As a matter of fact, contracts shape our daily lives more than any other type of document. They govern our relationships, transactions, and interactions throughout our lives, protecting our rights and outlining our responsibilities.

And while contracts have been around for as long as there have been people, their formats have changed over the years. Today, we're taking a look at the two most popular contract formats and comparing them side by side: traditional vs modern, paper vs digital.

Introducing our contestants

From Filing Cabinet Avenue, we have the veteran of deal making, the traditional paper contract. With years of experience under its belt and a long heritage of wet signatures, it comes armed with a blue fountain pen and an aged paper aroma.

Its challenger, arriving from Cloud City, is the modern, electronic contract. A favorite to some and a mystery to others, it boasts state-of-the-art encryption, efficiency, and rapid deal execution.

In this face-off of ink and pixels, each contestant brings its own strengths into the ring. As the bell goes off, it's time for you to decide the winner.

Round 1: Speed and efficiency

The creation and signing of traditional contracts involves physical paperwork. The exchange of physical copies, manual redlining, and the logistics of coordinating changes is time-consuming.

Traditional contracts also rely on wet signatures. This means sealing the deal requires either in-person meetings or several rounds of snail mailing back and forth. The exchange of hard copies is inevitable, and it often extends the overall time to finalize the contract.

On the other hand, electronic contracts enable real-time collaborative editing. Besides reducing the document creation time, this also allows all parties to quickly review the terms and respond to proposed edits.

In addition to speeding up the negotiation process, electronic contracts also make the sign-off easier. All parties can sign the contract from anywhere with secure internet access. This eliminates the need for physical presence which, in turn, speeds up contract finalization.

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88% higher conversion rates

of Better Proposals documents compared to PDF

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19% better customer experience

when using Better Proposals live chat

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85% faster document creation

thanks to Better Proposals integrations

Round 2: Familiarity

Traditional contracts are paper-based documents that people can physically handle. Since they have a long history of use, many people are familiar with the process of signing hard copies. What's more, the physical act of putting pen to paper can contribute to a sense of personal engagement and commitment.

When it comes to electronic contracts, they require the use of digital platforms. While electronic signature technology is widely familiar and accepted, familiarity may vary depending on the individual and the platform itself.

For example, people who are less technologically inclined might doubt the validity of electronic contracts. Or, they might have issues adapting if the platform you're using is not intuitive.

Round 3: Accessibility

Since traditional contracts require physical presence, they can be limiting. This is especially true when you're doing business internationally. Coordinating signing meetings and mailing physical copies may be challenging across time zones, leading to delays.

In addition to that, physical filing systems make accessing the contracts difficult. Remote access is impossible, and digital sharing is a nightmare of locating, scanning, and emailing.

With electronic contracts, business doesn't have to wait. Your clients can access the contract as soon as you send it and look it over at their earliest convenience. Instant sharing means faster contract distribution, as well as a faster contract lifecycle.

And since there's no need for physical copies, you can easily access all your electronic contracts from a centralized digital storage. Besides organized file structures, you also have access to search functionalities, reducing the time to locate documents.

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58% of documents

are opened on mobile devices

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82% higher conversions

for visually appealing documents

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88% of clients

don't want a PDF

Round 4: Security

With traditional contracts, you're relying on physical security measures. And while locked filing cabinets are better than nothing, they are vulnerable to theft, loss, and damage. What's more, once a traditional contract is shared, access control becomes an issue. Since physical copies can be easily duplicated without leaving a trace, you can't be 100% sure you're compliant with data security regulations.

In addition to storage and access issues, there's also the question of signature authenticity. While they're a great personal touch, physical signatures can be easily tampered with or forged.

All things considered, electronic contracts provide you with higher security than traditional ones. The use of encryption technologies significantly reduces the risk of unauthorized access. What's more, electronic signatures ensure the authenticity and integrity of the signer.

And to top it all off, electronic contract systems give you control features to make sure only authorized users have access. You can monitor who accessed the document and when, letting you and your clients rest easy.

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Detect the signer's IP address

to verify their identity

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Record the date and time

of the digital signature

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Lock document after signing

to prevent unauthorized changes

Round 5: Legal validity

The main reason traditional contracts are still seen by some as more legally valid is their historical recognition. That said, the courts everywhere are moving with the times.

Both the EU and the US have legislation (UETA and ESIGN, respectively) recognizing electronic signatures as valid. This means that electronic contracts hold as much legal validity as traditional ones, as long as there are necessary digital authentication methods in place.

Round 6: Costs

If you're dealing with a large amount of traditional paper contracts, the expenses can get steep for materials alone. In addition to paper, printing, and ink, there's also the cost of postal and courier services involved in the document exchange.

When dealing with international clients, these fees can add up, especially if there's travel involved. In-person negotiations, meetings, and signings all come with travel expenses that can accumulate. And let's not forget physical storage, which includes the costs of space, organizational systems, and handling.

With electronic contracts, you're eliminating costs related to printing right off the bat. What's more, the use of digital signatures also removes the need for physical presence, resulting in savings on courier and travel expenses.

And when it comes to storage, electronic contracts live in the non-physical realm of the cloud. This eliminates the need for physical storage, saving you money on storage facilities, file cabinets, and rent.

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$8 billion a year

spent on paper document management in the US

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$20 on average

to file a single physical document

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$120 on average

to find a misplaced physical document

Round 7: Environmental impact

In the context of environmental sustainability, electronic contracts win hands down. This is because traditional contracts contribute to:

  • Paper consumption, which leads to deforestation. It negatively impacts the environment due to use of natural resources, energy, and chemicals.

  • Pollution, due to reliance on printing and ink. More specifically, those ink cartridges have to be manufactured, transported, and then disposed of.

  • Carbon emissions due to courier and postal services. Since the process of transportation involves fuel consumption, mailing physical contracts isn't environmentally friendly.

Electronic contracts, on the other hand, are a paperless process with a significantly lower carbon footprint. Besides lowering the environmental impact associated with paper production, they also help reduce pollution. Since there's no need for printing and ink, there are also no risks that come with the disposal of printing materials.

So, who's your winner?

For us, it's electronic contracts all the way. We may be biased, though, but that's only because we're used to great digital signature solutions - our own.

Try signing a contract with Better Proposals and you'll see why. Fair warning: you won't want to go back to what you were using before.

Paper cuts and ink smudges? No, thanks.

Sign up for Better Proposals and start collecting legally binding digital signatures. Your clients will love you for it.

Patricija Šobak's profile image
Patricija Šobak puts her talent in spotting questionable grammar and shady syntax to good use by writing about various business-related topics. Besides advocating the use of the Oxford comma, she also likes coffee, dogs, and video games. People find her ability to name classic rock songs only from the intro both shocking and impressive.