The Case for a Digital Legal Engine: Why Traditional Contract Principles Have Failed Online

Apr 29, 2015 4:09:32 PM

Traditional Contracting and Recordkeeping

The contract. Something that has been used to memorialize agreements between 2 or more parties since the beginning of time (well maybe not that long). Most people know, whether a lawyer tells them or not, that in order for a contract to have any meaning:

  • It should be presented to all parties (i.e. they know they are entering into a contract)
  • It should be signed and dated by all parties.
  • Amendments should also be signed and dated by all parties.
  • Copies of executed contracts and amendments should be maintained (so you can prove there is a contract if you ever need to)

That is an over-simplification that might make a law professor squirm, but you get the drift. Obviously some of this is done digitally now (i.e. without paper and ink). Pretty simple, traditional contract execution and management principles. It looks something like this:

Traditional Contracting

 

These principles break down for one-to-many digital agreements.

Terms of Use. Terms of Service. Privacy Policies. You see them everywhere, and if you do business online, you probably (or at least you should) use them on your website or mobile app. These agreements are intended to be executed many, many times...sometimes millions of times per day for high volume sites and apps. If an online business wants to be protected, it better HOPE these agreements are being accepted/executed by the users of its site/app. So, how have the basic principles listed above been translated for use with one-to-many digital legal agreements? VERY POORLY!

  • Poor Presentation. Presentation of these agreements is haphazard at best, many times being driven by UX designers rather than court-tested best practices.
  • Execution? Many times there is no explicit tracking of acceptance.
  • Amendments? Don't even get me started here - online businesses update whenever they want and rarely track if amendments are being reviewed and accepted.
  • Record Keeping? The best case here is records are buried in a database not designed to track agreement acceptance. Worst case is that its not being tracked at all.

The result is either unenforceable or difficult to enforce contracts. This mess looks something like this:

one-to-many

 

The Digital Legal Engine Is Born

This problem is a big reason why built the digital legal engine that is PactSafe. So how does our solution fix that mess above? See for yourself:

digital legal engine

From the second a digital legal agreement is drafted, it is run through our digital legal engine, which:

  • Ensures proper presentation of agreement and modifications utilizing courtroom tested best practices.
  • Structures and tracks all acceptance data in manner designed to maximize efficient accessibility.
  • Provides easy accessibility via legal analytics dashboards.
  • Generates certifications of the who, what and when for all users and all agreements with the push of a button.

Pretty cool, huh? Seems silly to do it any other way.

 

 

 

Brian Powers

Written by Brian Powers

PactSafe CEO & Founder