Is an electronic signature legally valid?

Yes. Under the ESIGN Act (15 U.S.C. §7001) and state UETA laws, electronic signatures are legally equivalent to handwritten signatures if intent, consent, attribution, and reliable record retention are present.

When is a notarization required?

Notarization depends on the document type and state law. Real estate deeds, some powers of attorney, and certain statutory filings commonly require a notary or witnesses.

What if a signer lacks authority?

Contracts signed by persons without authority risk being voidable. Obtain corporate resolutions or proof of delegated authority before execution to reduce challenge risk.

How do I prove who signed electronically?

Maintain an audit trail that logs signer identity, timestamps, IP addresses, and authentication methods; stronger identity checks increase evidentiary weight.

Can consumers refuse electronic records?

Yes. For consumer-facing transactions, ESIGN requires a consumer disclosure and affirmative consent process that explains the right to paper records and how to withdraw consent (15 U.S.C. §7001(c)).

How long should I keep the signed agreement?

Retain per relevant standards: at least 3 years for tax records (IRC §6501(a)), 6 years for HIPAA-related records (45 CFR §164.530(j)), and longer where state law or contract risk warrants.

Electronic Signature
Templates
Legal
Legal Understanding Agreement

Legal Understanding Agreement

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LEGAL UNDERSTANDING AGREEMENT

This Legal Understanding Agreement ("Agreement") is entered into as of by and between Party A Name: with principal address: (\"Party A\") and Party B Name: with principal address: (\"Party B\").

RECITALS

WHEREAS, Party A and Party B have engaged in discussions concerning certain business activities, services, deliverables and potential collaboration described herein; and

WHEREAS, the parties desire to set forth their mutual understanding of the terms, responsibilities and limited obligations governing the contemplated relationship and activities; and

WHEREAS, the parties intend that certain provisions of this Agreement shall be legally binding while other provisions shall reflect the parties' present intentions and expectations pending the negotiation of a definitive agreement.

NOW, THEREFORE

In consideration of the mutual covenants and promises contained herein, and other good and valuable consideration the sufficiency of which is hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1 "Confidential Information" means any non-public information disclosed by one party to the other, whether written, oral, electronic or in any other form, that is designated as confidential or that a reasonable person would understand to be confidential given the nature of the information and the circumstances of disclosure. Confidential Information includes, without limitation, business plans, technical data, financial information, customer lists and pricing.

1.2 "Deliverables" means the tangible and intangible items to be produced or provided by a party as described in Section 3 and in any appended schedule.

2. SCOPE AND PURPOSE

2.1 The parties agree to cooperate in good faith to accomplish the activities described in this Agreement. The specific tasks and responsibilities are set forth as follows:

Deliverables and scope (describe in detail):

2.2 The parties acknowledge that timelines are estimates and shall be performed in accordance with the schedule below unless otherwise agreed in writing.

Target completion date:

3. OBLIGATIONS OF THE PARTIES

3.1 Each party shall perform its obligations in a timely, professional manner, consistent with industry standards. Party A shall be responsible for the tasks expressly allocated to it in the Deliverables description. Party B shall be responsible for the tasks expressly allocated to it in the Deliverables description.

3.2 Each party shall designate a representative to coordinate activities and to provide notices under this Agreement. A party may change its representative by providing written notice to the other party in accordance with Section 11.

4. CONSIDERATION

4.1 As consideration for the obligations set forth in this Agreement, the parties shall exchange the mutual promises and monetary consideration described below, which the parties agree is fair and sufficient.

Monetary consideration (if any):

4.2 Payment terms, invoicing and any milestones shall be as specified in a written schedule agreed by the parties. Absent an agreed schedule, payment shall be due within thirty (30) days of invoice.

5. CONFIDENTIALITY

5.1 Each party agrees to hold Confidential Information in strict confidence and to use it solely for the purposes contemplated by this Agreement. Confidential Information shall not be disclosed to any third party except (i) to the receiving party's employees or contractors on a need-to-know basis who are bound by confidentiality obligations, (ii) as required by law, or (iii) with the disclosing party's prior written consent.

5.2 The obligations in this Section shall not apply to information that: (a) is or becomes publicly known through no breach by the receiving party; (b) is lawfully received from a third party without breach; or (c) is independently developed without use of the disclosing party's Confidential Information.

5.3 The parties acknowledge that a breach of this Section may cause irreparable harm for which monetary damages would be inadequate and agree that injunctive relief is an appropriate remedy in addition to other remedies at law or in equity.

6. BINDING EFFECT

6.1 Except as expressly set forth in Sections 4 (Consideration), 5 (Confidentiality), 9 (Indemnification) and 13 (Governing Law), the parties understand and agree that this Agreement is primarily a statement of current intentions and is not intended to create binding obligations with respect to the negotiation or execution of any subsequent definitive agreement. Notwithstanding the foregoing, the sections expressly identified above shall be binding and enforceable.

7. INTELLECTUAL PROPERTY

7.1 Unless otherwise agreed in writing, each party retains all right, title and interest in and to its pre-existing intellectual property. Intellectual property developed solely by one party in the performance of this Agreement shall be owned by that party.

7.2 Joint development or work product shall be governed by a separate written agreement that allocates ownership, licenses and related rights; absent such an agreement, the parties agree to negotiate in good faith a fair allocation of rights.

8. TERM AND TERMINATION

8.1 This Agreement shall commence on the effective date and continue for a period of unless earlier terminated in accordance with this Section.

8.2 Either party may terminate this Agreement upon thirty (30) days' prior written notice to the other party if the other party materially breaches any obligation and fails to cure within the notice period.

9. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION

9.1 Each party represents and warrants that it has full corporate or organizational power and authority to enter into this Agreement and to perform its obligations hereunder.

9.2 Each party shall indemnify, defend and hold harmless the other party and its officers, directors, employees and agents from and against any third-party claims, liabilities, losses, damages and expenses arising out of the indemnifying party's breach of this Agreement, negligence or willful misconduct.

10. LIMITATION OF LIABILITY

EXCEPT FOR LIABILITY ARISING FROM A PARTY'S BREACH OF SECTION 5 (CONFIDENTIALITY) OR LIABILITY FOR INDEMNIFICATION OBLIGATIONS UNDER SECTION 9, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES, AND EACH PARTY'S AGGREGATE LIABILITY SHALL BE LIMITED TO THE AMOUNTS PAID OR PAYABLE UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTHS PRECEDING THE EVENT GIVING RISE TO THE CLAIM.

11. NOTICES

11.1 All notices required or permitted under this Agreement shall be in writing and shall be delivered personally, by certified mail (return receipt requested), by nationally recognized overnight courier, or by hand delivery to the addresses set forth below, or to such other address as a party may designate in writing.

Notice recipient for Party A (name and address): Notice recipient for Party B (name and address):

12. AMENDMENTS, WAIVER AND COUNTERPARTS

12.1 No amendment or modification of this Agreement shall be effective unless in writing and signed by both parties. A waiver by either party of any breach or default shall not constitute a waiver of any other or subsequent breach or default.

12.2 This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic means shall be binding.

13. GOVERNING LAW; SEVERABILITY; ENTIRE AGREEMENT

13.1 This Agreement shall be governed by and construed in accordance with the laws of the state or jurisdiction specified below without regard to conflict of law principles.

Governing law jurisdiction (state or jurisdiction):

13.2 If any provision of this Agreement is held to be invalid, illegal or unenforceable, the remaining provisions shall remain in full force and effect and the parties shall negotiate in good faith a valid substitute provision that comes closest to the parties' original intent.

13.3 This Agreement, together with any schedules and exhibits specifically incorporated in writing, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior oral or written agreements, understandings and negotiations.

MISCELLANEOUS PROVISIONS

14.1 Relationship of the Parties. Nothing in this Agreement shall be construed to create a partnership, joint venture, agency or employment relationship between the parties, unless expressly stated in writing.

14.2 Assignment. Neither party may assign its rights or delegate its obligations under this Agreement without the prior written consent of the other party, except that either party may assign this Agreement to an affiliate or in connection with a merger, acquisition or sale of substantially all of its assets.

Additional terms or special instructions:

Party A Printed Name:

By:

Date:

Party B Printed Name:

By:

Date:

What a Legal Understanding Agreement Is and when it applies

A Legal Understanding Agreement is a written contract that records parties' mutual expectations, responsibilities, and key terms for a transaction or relationship. It typically covers scope of work, deliverables, payment or consideration, confidentiality provisions, and dispute-resolution mechanisms. When executed, it creates enforceable obligations between the named parties provided signatures demonstrate intent and attribution. Electronic execution is generally valid under federal and state law when the four ESIGN/UETA criteria are met: intent, consent, attribution, and reliable retention and reproduction of the record.

Why a clear Legal Understanding Agreement matters

A clear agreement reduces ambiguity, documents obligations, and provides a baseline for enforcement or dispute resolution. It protects parties by defining scope, timelines, payment terms, and remedies, and supports regulatory compliance when it incorporates required disclosures or industry-specific terms.

Who typically prepares and signs this agreement

Organizations and individuals across legal, commercial, and professional services commonly use this agreement to set expectations and reduce downstream disputes.

Small business owners and contractors who need explicit scope and payment terms to avoid scope creep and late payment.
In-house legal teams and outside counsel who standardize language to mitigate liability and preserve evidence for potential disputes.
Private individuals when documenting consulting arrangements, settlements, or other personal contracts that require clarity and proof of agreement.

The agreement should be tailored to the parties, the transaction value, and any industry or statutory requirements that affect enforceability.

Key signatories and who represents each party

Authorized Officer

A corporate officer or other person with board-granted authority should sign for companies. Ensure corporate resolutions or delegation documents support the signatory to avoid challenges to authority during enforcement.

Individual Client

A named natural person signs for themselves. Use government ID for identity matching in high-value agreements and require printed name and title where appropriate to link signature to legal capacity.

Essential parts to include in a professional Legal Understanding Agreement

A robust agreement is concise but complete. Include core provisions that allocate risk, define performance, and set procedures for changes and dispute resolution.

Parties

Full legal names and entity types of all parties, including state of formation for companies and contact information for notices.

Scope

Clear description of services, deliverables, acceptance criteria, and milestones. Attach exhibits for technical specs where needed.

Consideration

Price, payment schedule, invoicing terms, and any retainers or escrow arrangements to document what each party receives.

Term and Termination

Agreement start date, termination rights, notice periods, and obligations that survive termination such as confidentiality and indemnities.

Liability and Remedies

Limitations of liability, indemnification scope, and any liquidated damages or caps on recovery.

Governing Law and Dispute Resolution

Selected state law and forum, plus mediation/arbitration clauses if parties prefer alternatives to court.

Step-by-step: completing the Legal Understanding Agreement

Follow these sequential steps to prepare, review, execute, and store the agreement to maintain legal effect and evidentiary value.

01

Draft Terms: Populate parties, scope, and payment details accurately.
02

Internal Review: Have legal or an authorized reviewer confirm authority and risk allocation.
03

Signatures: Execute with dated signatures from authorized representatives.
04

Recordkeeping: Store final signed copy and audit trail securely for the required retention period.

Configuring electronic completion for the agreement

Set up a consistent e-signature workflow to capture intent, identity, and a complete audit trail before sending the document to signers.

Field	Configuration
Signer Order	Sequential or parallel routing based on signatory roles
Authentication Level	Email link with optional SMS or knowledge-based auth for higher-risk agreements
Required Fields	Make name, date, and signature mandatory to prevent incomplete execution
Audit Capture	Enable IP, timestamp, and event log retention for evidentiary support

Typical routing and submission destinations

Identify where executed agreements are sent and who receives copies; this reduces confusion and speeds downstream tasks.

Primary Recipient: Deliver executed copy to the contract owner or procurement team
Accounting: Send invoices and payment terms to accounts payable
Legal: Archive a copy in the legal document repository for compliance
External Parties: Provide signed copies to external counsel or third parties as required

Technical considerations for digital signing and submission

Digital execution requires a platform that supports secure signatures, audit trails, and the document formats your organization uses.

File Formats: PDF, DOCX accepted; preserve formatting and embedded exhibits
Integrations: Connectors to CRM, ERP, or cloud storage simplify routing
Authentication: Support for email, SMS, and stronger identity methods

Choose platform settings that log signer identity, preserve a tamper-evident file, and store the audit trail alongside the executed document for future reference.

Common timing and deadline expectations

Tracking dates keeps obligations current and helps trigger renewals, payments, and termination rights without dispute.

Effective Date:

The date obligations begin; may be execution date or a specified start date

Performance Milestones:

Dates tied to deliverables or phases; track acceptance periods

Payment Due:

Net payment terms (e.g., Net 30) and late-payment consequences

Notice Periods:

Time required for termination or cure notices

Renewal Windows:

Automatic renewal deadlines and opt-out notice periods

Common preparation errors to avoid

Using informal names or nicknames instead of legal entity names, which can create ambiguity about the contracting party.
Omitting effective dates or leaving the effective date blank, which can delay when obligations begin and complicate enforcement.
Failing to document changes or amendments in writing and signed by authorized representatives, producing conflicting expectations.
Relying on image-only signature overlays without an audit trail, which weakens evidentiary value in disputes.

Primary legal and operational risks from incorrect agreements

Unenforceability: Missing essential terms may render obligations unenforceable

Authority Disputes: Signatory lacked authority to bind the entity

Regulatory Breach: Failure to include required disclosures for regulated industries

Financial Exposure: Uncapped liability or unclear payment obligations

Tax Consequences: Incorrect reporting or missing contract classications

Data Privacy: Improper handling of personal data under HIPAA or state privacy laws

Representative eSignature vendor feature and pricing comparison

Compare baseline pricing and key capabilities to choose a platform that supports required authentication, compliance, and volume needs.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies	Varies	Varies	Varies
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Frequently asked questions and practical answers

Answers to common questions about signing, validity, identity, and post-execution handling of the Legal Understanding Agreement.

Need help? Contact support

Is an electronic signature legally valid?
Yes. Under the ESIGN Act (15 U.S.C. §7001) and state UETA laws, electronic signatures are legally equivalent to handwritten signatures if intent, consent, attribution, and reliable record retention are present.
When is a notarization required?
Notarization depends on the document type and state law. Real estate deeds, some powers of attorney, and certain statutory filings commonly require a notary or witnesses.
What if a signer lacks authority?
Contracts signed by persons without authority risk being voidable. Obtain corporate resolutions or proof of delegated authority before execution to reduce challenge risk.
How do I prove who signed electronically?
Maintain an audit trail that logs signer identity, timestamps, IP addresses, and authentication methods; stronger identity checks increase evidentiary weight.
Can consumers refuse electronic records?
Yes. For consumer-facing transactions, ESIGN requires a consumer disclosure and affirmative consent process that explains the right to paper records and how to withdraw consent (15 U.S.C. §7001(c)).
How long should I keep the signed agreement?
Retain per relevant standards: at least 3 years for tax records (IRC §6501(a)), 6 years for HIPAA-related records (45 CFR §164.530(j)), and longer where state law or contract risk warrants.

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