How to Create a Legally Binding Contract Online

By James Withers

Consumer confidence in the internet as a virtual business environment has increased in recent years. Recently, many corporations and small business owners have turned to online contracts in order to create binding legal agreements via computers. If you are new to these sorts of transactions, you can quickly learn how to retool a free legal contract, such as an Equipment Rental Contract, a Consignment Contract, a Bill of Sale for Goods or even a Sales Contract. By doing so, you will gain a practical understanding of contract law, using internet technology to secure digital signatures. This process not only a lot simpler than you think, it is legally binding.

Use an offline document as a model to your online contract. Even though the internet is a relatively new business environment, it is still not unlike a standard business environment in regard to a contract. For this reason, you can search the internet to locate a free legal contract to use as a template for composing your online contracts. However, be sure to mention the jurisdiction within which your contract has been made, since the party with whom you are doing business may live on the other side of the world.

Clearly state the terms of the contract. Running a virtual business requires you to use language and images far more than in a real world context. As a seller, make sure that you explicitly state as many details of your agreement as will facilitate your transaction. For example, if a product is being sold, what is the product's condition? Are prices clearly stated? Are shipping charges obvious? When should payments be made?

Be sure that your contract includes the four components of an agreement. Essential components of an online contract are: 1) an offer of service, 2).acceptance of the offer, 3) consideration (which are the services or money you agree to provide) and 4) an intention to enter legal relations. Digital signatures, or even measures such as confirmation emails, provide sufficient evidence of an intention to enter into a contract.

Protect yourself by adding contingencies into your contract. Contingencies allow you to cancel a contract if certain conditions are not met. Depending on the type of legal agreements you decide to enter into online, contingencies can be vital to your financial well-being. For example, if you are selling or buying a vehicle, a contingency clause may be that the vehicle must pass a state inspection test before the transaction will be finalized. While contingency clauses may clarify expectations for both parties of a sale, beware of adding too many since they may overwhelm a buyer.

Print a copy of your contract for safekeeping. If you have ever watched a small claims court case on daytime television, you are well aware of the fact that tangible evidence is vital when trying to prove or disprove a case. If you go to the trouble of creating and implementing an online contract, make sure to also take the time to print out the document for your protection. This will only take a moment and a few pennies, but it could be worth hundreds or thousands of dollars later if you need to present your case before a judge.

About the Author

James Withers has authored in excess of 200 articles on eHow, expanding on journalistic experience acquired as a commentator for the newspaper of the University of Texas at Arlington. Withers began publishing professionally in 2007. Withers holds a Bachelor of Arts in English from the University of Texas at Arlington.