Can Digital Contracts Be Enforced?

Digital contracts typically consist of contracts that have been signed digitally. Legal conflict can arise at times, especially when forged signatures happen or if someone doesn’t consider a digital contract to be valid. In this article, we’re going to discuss digital contracts in depth and offer insight into whether or not digital contracts can actually be enforced.

Signing a digital contract

What You Need to Know About Digital Contracts

Entrepreneurs, professionals, and individuals alike often find themselves looking for an online solution to the needs for easier contract resolution. Contract management software is readily available, offering a simple and streamlined digital contract signing process. Contract insight tells us that digital contracts are simply more convenient for all involved parties.

Parties can sign from anywhere, without the stress of meeting at a physical location. Digital contracts usually result in all parties signing faster because they can sign anytime, regardless of the time zone, schedules, and other factors.

The Many Forms of Digital Contracts

The most mainstream form of digital contracts are signed using contract management software such as PandaDoc and DocuSign. Blockchain technology has heralded in smart contracts, which can be used to create anonymous, secure, autonomous agreements. These two types of digital contracts are the most typical that you’ll see today.

It’s possible for a photocopy of a contract to be considered a digital contract if it’s stored digitally, but this form of backup will almost always hold up in court because there was a physical source document. The kind of digital contracts we’re covering will include contract management software and blockchain based digital contracts. So, can these digital contracts actually be enforced by a court of law?

A Few Considerations and Some Legislations

The answer to that question isn’t a clear-cut one. There are several things that need to be considered. For instance, the country you live in will generally have its own laws pertaining to digital contracts.

The UK, for instance, considered digital contracts as legally binding contracts since the Electronic Communications Act 2000 was passed as a legislation back in 2000. The legislation essentially supports cryptography service providers in facilitating e-signatures for contract signing. The legalities of e-signatures are further enhanced, as the UK closely follows the eIDAS regulations since July 2016. eIDAS provides a standardised framework for electronic identification on digital transactions, not only in the UK, but also in the EU.

In the U.S., 47 states, Washington DC, and the U.S. Virgin Islands accept digital contracts as legally upheld documents. Thanks to new-age legislation, we can follow the provisions of the EUTA and ESIGN laws to know whether or not our digital contracts are enforceable. We’ll cover those in more detail shortly.

In India, however, digital contracts are governed by the Indian Contract Act. This legislation was passed in 1872, and it obviously doesn’t cover digital contracts. However, its provisions are used and applied to digital contracts.

Around the world, there are nearly 30 countries enforcing digital contracts, including those in the European Union, Australia, Russia, and Canada.


What Does It All Mean?

Well, the first thing you’ll need to do is check your local laws. Here in the UK, the the Electronic Communications Act 2000 and eIDAS make it possible for digital contracts to hold up by recognising digital signatures and documents. E-signatures are specifically given equivalent consideration as physical signatures, and e-signed digital contracts have the same legal weight as physical ones.

Generally speaking, digital contracts are enforceable in most places in the world as long as the legal requirements are satisfied. If you find yourself using a digital contract, you could still benefit from thorough research or even a legal consultation to make sure that your document will offer sufficient legal protection.

As always, do your due diligence, ask your colleagues and fellow business owners, and consult with your trusted lawyer to learn whether digital contracts are feasible and enforceable in your business deals.