Eliminating Hard Copy Contracts (United States)

Wisdom of the Crowd:

Response #1: We moved away from hard copy customer contracts several years ago when we began using an external solution for our Order to Cash process, so that all orders and contracts are created, signed and stored electronically.

The business owners typically store our vendor/partner contracts electronically.

Non-Disclosure Agreements (NDAs) are stored electronically within an Outlook mailbox accessible by a few groups as 'read only' content, so that the groups can determine if we already have an NDA in place with another party. The legal department is the only group which can modify the contents of that mailbox.

It is a bit of a mash up, but we are generally able to locate everything we need and to pull copies without any difficulties. Occasionally our business teams forget to countersign or store a fully executed copy.¹

Response #2: About five years ago, we made the decision to no longer retain original signed contracts for most agreements. Instead, we image the original and destroy it after a quality control (QC) period. The one exception being contracts relating to real property. We continue to maintain those originals.²

Response #3: We do the same, and that is a great point about identifying which contracts must have "wet" signatures. We keep real estate and employment agreements in hard copy; everything else is scanned. We are looking into several vendor products to further streamline the process.³

Response #4: We only use soft copies and have not had any issues from my personal experience.⁴ 

Response #5: I have taken the same approach -- soft copies for everything except where absolutely necessary. I cannot tolerate paper and paying for off-site storage. Be careful if you are operating outside of the US because, outside of the US, I find that it is more common to have hard copy requirements.⁵ 

Response #6: We do not keep hard copies of contracts. We try to include the below provision in all contracts:

Signatures. The parties intend to allow for the electronic execution, imaging, and storage of this Agreement and the admissibility into evidence of such an image in lieu of the original paper version of this Agreement. The parties stipulate that any computer printout of any such image of this Agreement shall be considered to be an "original" under the applicable court or arbitral rules of evidence when maintained in the normal course of business, and shall be admissible as between the parties to the same extent and under the same conditions as other business records maintained in paper or hard copy form. The parties agree not to contest, in any proceeding involving the parties in any judicial or other forum, the admissibility, validity, or enforceability of any image of this Agreement because of the fact that such image was stored or handled in electronic form. My plan is to have a policy in place that backs up our practice. My theory is that if it is documented as our standard practice, then it is more defensible.

While it makes sense to keep real estate (RE) and employment documents in hard copy, the reality is that we rarely ever get "wet" signatures for anything anymore, so there is no difference between an electronic copy and a hard copy.⁶

Response #7: I agree with all in that electronic storage is the way to go today. The next question that arises is how long to keep in storage, or should materials be purged (subject to litigation holds) say every seven years, or differing periods according to topics? While electronic storage costs are minimal these days with cloud technology, the costs of production if a case comes up in the future and nothing is ever cleaned up can be enormous.

I was wondering if anyone else has given thought to this aspect, and made any plans to address it?⁷

Response #8: My company is proposing to scan all paper copy contracts with vendors and then to destroy the paper. The electronic system will have a retention period built into it (statute of limitations for breach of contract), so the contract will come up for review for destruction at the right time. None of the scanned contracts will be wills, divorce records, real estate documents, or employee contracts.

I was asked whether any states will require the paper original and not enforce a scanned copy. The Uniform Electronic Transactions Act (UETA) says electronic records are as good as paper. Can anyone point me to a survey of state laws on this question? 

Response #9: That is a nice idea, but we do not always make it to paper. What is stored is not an "image"; instead, it is an electronic document that had a signature added using a computer. What if your customer converts it to an electronic agreement? Your words do not quite cover that scenario.⁹