How Contracts Are Usually Signed

June 14, 2024 • Contract Management • 5 minutes

Table of contents Newsletter

  1. The traditional contract signing process
  2. Methods of signing contracts
  3. Contract signing best practices
  4. Challenges in the contract signing process
  5. The role of contract management software in signing contracts
  6. Conclusion
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Signing contracts is the final step in making your business deals official. Whether it’s a physical signature or a quick digital approval, the way contracts are signed can impact efficiency, security, and timing. 

Let’s walk through how contracts are typically signed, what methods are most common, and how to avoid common pitfalls.

The traditional contract signing process

Before a contract is signed, a lot of things need to fall into place. Here’s a breakdown of the typical steps.

Drafting the contract

First up: how to draft a contract. The legal or procurement team usually takes the lead here. They put together the initial contract, working with other departments to make sure it covers all the details — whether it’s about services, payment terms, or delivery timelines.

Internal review

Once the contract is drafted, it needs a second (and sometimes third) pair of eyes. Legal, finance, and operations departments will go through it to make sure everything checks out. The key here is to avoid bottlenecks, so staying on top of reviews is essential.

Approval process

Now that everyone has reviewed the contract, it’s time to get the green light. Approvals from key stakeholders are crucial before anyone signs off. This step can drag if roles aren’t clear, so knowing who needs to approve what is a big timesaver.

Methods of signing contracts

There are a few different ways contracts get signed, depending on the needs of your business and the industry you’re in.

Wet signatures (physical signing)

A wet signature? It’s just a fancy way of saying “signing with a pen.” You might think most businesses have gone digital, but wet signatures are still common in places like real estate, government, and healthcare.

Pros:

  • It’s straightforward and legally recognized everywhere.
  • No need for special tech or software.

Cons:

  • It’s slower. You have to meet in person or mail the contract.
  • You’ll need to store physical copies, which can get bulky.

Electronic signatures (e-signatures)

Electronic signatures have become the go-to method for most businesses these days. With tools like DocuSign or Adobe Sign, you can sign and send contracts with just a few clicks. It’s fast, efficient, and reduces a lot of the paperwork headaches.

Advantages:

  • Quick, easy, and legally binding in most countries.
  • Cuts down on paper and storage issues.

When to use it:

  • For most business agreements, vendor contracts, and employee forms, e-signatures are perfect.

Digital signatures

Digital signatures are like e-signatures’ more secure cousin. They use encryption to verify the identity of the signer and protect the document from tampering. You’ll often find these used in industries where extra security is a must.

Industries that rely on digital signatures:

  • Finance, legal, and industries dealing with highly sensitive information.

Contract signing best practices

No matter how you’re signing, there are a few things you can do to keep the process smooth.

  • Double-check who’s signing: Make sure everyone signing the contract has the authority to do so. This prevents issues later on.
  • Agree on the terms first: Before anyone puts pen to paper (or clicks “sign”), make sure all the terms are clear to both parties. Misunderstandings can lead to major headaches.
  • Keep your contracts handy: After signing, don’t let that contract disappear into the abyss. Whether it’s physical or digital, make sure it’s stored securely and easy to find later.

Challenges in the contract signing process

Even with the best intentions, things can go wrong during the signing process. Here are a few common challenges:

  • Waiting for approvals: We’ve all been there — waiting for that one key signature to push a deal through. Delays happen, especially when multiple departments or stakeholders need to sign off.
  • Miscommunication: If the contract terms aren’t clear or departments aren’t on the same page, you might face unnecessary back-and-forth. Clear communication upfront saves time and frustration.
  • Unauthorized signers: If someone who doesn’t have the authority signs the contract, it can lead to legal issues down the road. Always confirm who should sign before moving forward.

The role of contract management software in signing contracts

Contract Lifecycle Management (CLM) software can make the entire signing process a breeze. CLM automates the workflow, making sure everyone knows when it’s their turn to review or sign. It tracks deadlines, approvals, and keeps everything organized in one place — no more hunting through email chains or paper stacks to find a contract.

How CLM helps:

  • Speeds up approvals.
  • Tracks contract status in real time.
  • Keeps everything organized and compliant without manual effort.

Conclusion

Whether you’re using a pen, a click, or encryption, knowing how contracts are signed is key to keeping your business running smoothly. From wet signatures to e-signatures and digital signatures, each method has its place, depending on the situation. 

By following best practices, avoiding common delays, and using tools like CLM software, you can make the signing process faster, more secure, and way less stressful.

Create, collaborate, negotiate, e-sign, manage, and analyze all agreements on one platform.

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