With the advancement of technology, digital contracts continue to evolve. Businesses and legal operations need to decide which electronic signature they should use in a contract. For many companies, the debate becomes “clickwrap vs. e-signature.” Both belong to the same family of click-to-accept contracts. While clickwrap is considered a more modern and sophisticated choice for most companies, an e-signature may be appropriate for highly negotiated agreements. Picking the right method can streamline your company’s contract processes, drive revenue, and reduce contract turnaround time.
Innovative companies use clickwrap to enhance customer experience. Clickwrap is more effective because of how simple it is to use for the user all while creating enforceable back-end records of contract acceptance. Understanding the key differences between e-signatures and clickwrap agreements can help you pick the option that is best for your situation.
Types of signatures for contract acceptance
In the contracting world, there are different kinds of signatures. Each can create a legally binding agreement. The key differences are in how they’re signed and the benefits or disadvantages of some over others.
Wet signatures are as they sound: contracts executed on physical pen and paper. These are still used in specific situations. Maybe the contract took significant and lengthy negotiation because of its complex nature. Maybe the business simply isn’t aware of the potential benefits of electronic signatures and thinks that wet signatures are the only option. Some businesses simply prefer to sign important contracts in person.
However, a traditional wet signature is an inefficient option in the digital marketplace. Instead of a quick acceptance process, it is subject to competing schedules and lengthy delays. They are especially inefficient for high-volume agreements like terms and conditions or recurring business contracts. Digital signature methods are much more efficient at handling these situations.
Electronic signatures can be used just about anywhere. Whether the transaction is a tax return, online subscription, or a sales contract, this option can be cheaper and more efficient than wet signatures. For companies that offer an online service, e-signatures prevent the need for a hard copy of a signature. The entire contract acceptance process is faster and can happen entirely online.
The downside of an e-signature is its sometimes clunky nature, requiring a separate signature method or envelope-based signature. Envelope-based signatures are sent to a recipient to sign, which may result in delays waiting for the signature.
Clickwrap agreements are embedded onto a page or website or are presented at a hosted URL. This makes them especially expeditious. They require only one click to agree. Before, companies used these primarily for selling products or services online—especially B2C businesses. Now, clickwraps are used extensively across multiple sectors, including the financial field and B2B companies.
Digging deeper: clickwrap agreements and e-signatures
E-signatures are a broad category of electronic signature methods. Clickwrap is a very specific type within the electronic signature family. Let’s define these signature methods in greater detail to begin comparing them.
The term “e-signature” is actually a broad category of electronic signatures. The Electronic Signatures in Global and National Commerce Act (ESIGN) defines an electronic signature as “any electronic sound, symbol, or process” that is “logically associated” with the contract.
A clickwrap agreement is a type of single-click acceptance method. These are highly desirable for online and other digital contracts, as the user simply checks a box or clicks a button that says “I agree.” A clickwrap signature is a set of data points that make up an audit trail, rather than any physical signature. It shows how the user “affirmatively assented” to the terms of the contract and keeps accurate back-end records. These are especially prevalent in Terms and Conditions updates, sales policies, and other B2C situations. B2B organizations are increasingly relying on these agreements because of their high enforceability and the many benefits of using clickwrap contracts.
Similarities between clickwrap agreements and e-signatures
Clickwrap agreements are a type of electronic signature, so the two carry many similarities:
Both create legally binding contracts
Both types of signatures work to create a binding and enforceable contract. Their primary purpose is to legally bind a counterparty to an agreement. The ESIGN Act and the Uniform Electronic Transactions Act (UETA) both permit the use of electronic signature methods. Clickwraps and e-signatures are both considered legally binding substitutes for a physical signature so long as the company meets the requirements of those laws. The ESIGN Act is federal law while the UETA creates these protections for every state except New York (which has its own version that protects electronic signatures).
Both are used by businesses
Businesses around the world utilize clickwrap agreements and electronic signatures. They both reduce the amount of time it takes to reach contract acceptance as compared to traditional signature methods. This increased efficiency saves time and reduces contract turnaround time. As a result, both methods help improve a company’s bottom line.
Differences between clickwrap and e-signatures
Certain key differences between clickwrap agreements and other e-signature methods may help you decide which is best in a particular situation.
Ease of use
Clickwrap agreements simply require the user to check a box or click a button to agree to a contract. They are simple, easy to use, and streamline the entire contracting process. Despite this ease of use, they are still highly enforceable. They can also capture and record accurate records to enforce them later if needed. This makes them distinctly ideal for high-volume contract acceptance.
Other e-signature methods are clunky, take more time, and make the transaction far less seamless. Customers and even business partners expect an efficient process that does not ruin the experience. Consumers especially may even abandon an online store or their cart if it requires a confusing or time-consuming signature process. Instead, they will head to a competitor that provides a smoother experience.
Back-end record keeping
Clickwrap agreements offer centralized contract storage for back-end records. When a user clicks “I agree” or checks the box, the clickwrap automatically stores critical information like the screenshot, the version of the contract, and much more.
Other e-signature contracts are often stored in disparate locations across the business. This means that locating records requires lots of time spent digging through emails and personal drives. This is inefficient, costly, and commonly results in unenforceable agreements.
Deciding between clickwrap vs electronic signatures
Making the choice between clickwrap vs e-signatures will depend greatly on the specific contract you are dealing with. Highly negotiated and unique contracts may benefit from an e-signature. High-volume contracts or those that require little negotiation will likely benefit from clickwrap agreements.
Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.
- Types of signatures for contract acceptance
- Digging deeper: clickwrap agreements and e-signatures
- Similarities between clickwrap agreements and e-signatures
- Differences between clickwrap and e-signatures
- Deciding between clickwrap vs electronic signatures
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