7 Things You Need to Know About Contracts for Your Online Business

1.  What makes a document a contract?  

The legal answer is that a document needs 3 basic elements to be a contract:  an offer, acceptance of the offer, and consideration (something of value exchanged between the parties). While this formula seems simple enough, if there’s a fight about the contract - whether the contract actually exists or whether it can be enforced by one party against the other, these 3 elements can take on some complexities. When the terms of your contract aren’t clear, then this breaks down the offer-acceptance-consideration triangle. And, because contracts don’t need to be in writing, you could have an oral contract if these 3 elements are present in your exchange with another party. 

2.  Does a contract have to be in writing? 

Most of the time, contracts do not need to be in writing. There are certain kinds of contracts that must be in writing or they are not enforceable, for example, contracts to sell real estate. But most of the time, oral agreements are just as enforceable as written ones. But, having written agreements helps avoid disputes.  When you are relying on oral agreements, either party can easily forget what was agreed to, or the parties might not have understood what the other party was offering to do or pay. And, in some cases, one party might try to take advantage of the other party by claiming the oral agreement was different from what the other party remembers. 

3.  Do contracts need original signatures? 

Contracts typically used in online business do not require original signatures. They can be signed electronically, either by collecting a scan of the parties’ signatures, or by using software that adds a signature electronically and collects a record of when the signatures were affixed to the contract. Zapier rates document signing software in this article. 

4.  Can contracts be signed by a “click and accept” process? 

Yes, and in online business this is very common. These types of contracts are usually referred to as Terms of Use or Terms and Conditions. In this case, in order to proceed with a purchase, the buyer must check a box that they agree to the terms of purchase. Without clicking the box, the purchase can’t be completed. 

5.  Are Click and Accept Contracts Enforceable? 

Yes, click and accept contracts are enforceable. If you are applying the same terms and conditions to every purchaser of your course or program, this is an effective and legitimate way to manage your contract, instead of asking everyone to scan their signature or digitally sign through a software platform. You can read more about the enforceability of contracts in my Blog, Three Essential Components to Make Your Online Business Contracts Enforceable. 

6.  Can I Use Click and Accept Contracts for Every Situation? 

Most likely, no. There are some contracts that you should have your customer or the other party sign, and you should also countersign the agreement. When you have sent a proposal for services, or are hiring an independent contractor, you would want this type of contract to be individually signed by you and the other party, and then both parties should get a copy of the fully signed agreement. The parties can use software to obtain digital signatures. For a contract (other than terms and conditions or click and accept contracts) to be valid, both parties must sign it. 

7.  Do I need an attorney to draft my contracts for them to be enforceable? 

No. Anyone can draft a contract. But the quality of your contracts is likely going to be much better if you use attorney drafted contracts, created with online business in mind. Think of it this way. You can learn to play the contrabassoon, one of the most difficult wind instruments to play, by yourself, or you could get help learning how to play and use the instrument. It’s like that with contracts, too. You’re likely to become a much better player much more quickly with some help and instructions.

Do you need contracts in your online business? Check out my customizable legal templates in the Step Up Your Legal™ Template Shop.