You’ve had back-and-forth negotiations for over a month and it’s time to sign on the dotted line. We know exactly what’s going through your mind: Did I catch everything? What’s missing? Who needs to approve this? Am I positive this is the best possible outcome?
It’s a nerve-wracking step, yet contract execution is the most important stage in the contract development process. Let’s take a step back, simply put – contract execution is when parties sign a contract that immediately becomes a legal entity.
Why does this step give us such anxiety? Well, a misstep in this final phase could potentially cost millions. In order to execute a smooth and successful contract approval process, you need to understand how to navigate and complete this monumental step.
Let’s first talk about what’s at stake if you fail to execute a contract correctly:
- An unenforceable contract. This means a transaction is valid but it will not hold up in court. So, you’ve outlined the service, but legally if things go awry, you won’t be able to hold the other party accountable in court.
- Unexpected confusion and uncertainty around contract terms. If you use ambiguous and elusive language to outline terms, you can bet an expensive and time-consuming back-and-forth will follow.
- A shorter limitation period. It’s possible it may take several years before a deliverable tangibly materializes. Don’t get caught in a sticky timeline that undermines your objectives and jeopardizes company growth or increases liabilities.
Now that you understand some of the most common risks, we’ll walk you through two important moments during contract execution.
Identify who needs to sign.
After a contract is finalized, no changes can be made. Identify the people in your organization who need to approve and sign the contract. These players should be strategic because ideally, their expertise will ensure nothing is missed. Make it easy on them by setting up time to walk through the nitty-gritty details. Come to the sit-down with proactive questions designed to identify potential risks and backlash.
Agree on the signature method.
There are two popular ways to sign a contract. Ensure both parties are aligned on the signature method so the contract is binding and finalized.
- Electronic signature | Records digital signature that proves online execution process, names and titles of signing parties, and the date on which each party signed the contract.
- Ink signature | Records handwritten signature that proves acceptance by each party, names and titles of signing parties, and the date on which each party signed the contract. Through this method, contracts can be scanned digitally.
In today’s digital era, electronic signatures are the most secure and fastest way to speed up the contract approval process. Additionally, electronic signatures can increase security, since contracts don’t need to be physically delivered to obtain signatures. During the final stage of contract execution, the contract has to be filled. E-filling makes it easy to find contracts in the future. Ironclad is happy to help speed up contract execution through e-signatures and e-filling.
The contract approval process doesn’t have to be scary or risk-packed. When you strategically move through the process, know that you’re one step closer toward creating meaningful change in your organization. It’s exciting!
Ironclad is the #1 contract lifecycle management platform for innovative companies. L’Oréal, Staples, Mastercard, and other leading innovators use Ironclad to collaborate and negotiate on contracts, accelerate contracting while maintaining compliance, and turn contracts into critical carriers of operational business intelligence. It’s the only platform flexible enough to handle every type of contract workflow, whether a sales agreement, an HR agreement or a complex NDA. The company was named one of the 20 Rising Stars on the Forbes 2019 Cloud 100 list, and is backed by leading investors like Accel, Y Combinator, Sequoia, and BOND. For more information, visit www.ironcladapp.com or follow us on LinkedIn and Twitter.
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