TL;DR: Signed agreements should be retained for years, typically 3 to 7+ depending on federal, state, and industry rules, and not deleted prematurely, since they serve as critical evidence in audits, disputes, and litigation.
Is It Necessary to Keep Signed Contracts?
Consider a global company, which after expanding their operations in another continent is faced with a regulatory audit of their operations. The auditors demand proof of contractual obligations with the local partners. Since the company had retained signed agreements in both electronic and physical form, it was able to demonstrate compliance with the applicable federal requirements, regulations, statutes and decrees.
Managing agreements in multiple locations can be tiresome, difficult to maintain and may lead to violation of company’s data security policy. Thus, knowing how long to keep signed agreements and when it is safe to delete the records is highly crucial for entities or businesses such as healthcare operations, judicial courts, legal firms among many others. Without a proper document retention policy, entities may find themselves defenseless when claims arise.
Physical storage of documents consumes office space, limits access from various office locations, and makes it difficult to search for a record. Additionally, physical documents are easily tampered with by human activities and disasters such as fires. Thus, entities must ensure proper record storage using modern cloud-based platforms. BoldAgent enables users to find best services based on their needs. Additionally, using platforms like BoldReports for generating business reports, BoldSign for signing various documents or BoldDesk for internal and external communications enables users to retain their documents, contracts, agreements and e-mail communications electronically, based on their required period of time. This blog provides insights on how long signed agreements should be kept by entities and when it is safe to delete the records.
What is record retention?
Record retention is the systematic practice of maintaining, storing, managing, and eventually disposing or archiving legal, business, financial or contractual documentation for specific periods.
At the core of record retention are scheduling, policies and infrastructure which aid administrators to comply with business best practices, governing laws and regulations. Based on business needs or investigative regulations some signed agreements may be kept longer or even stored uniquely than others.
Major aspects of successful document retention strategy
At the heart of document retention are working retention policies, a retention schedule and a retention infrastructure.
Retention policies govern storage, classification, destruction and preservation of signed agreements. The policies reduce mishandling, prompt discarding of temporary records, reduce risks and keeps a clean, secure and coordinated record management system.
Retention schedules classify different records in a standard manner based on their duration requirements. This also ensures compliance with policies, regulation and laws pertaining to the agreements or records.
A record infrastructure makes it easier to search, retrieve and update the records at any time. This helps entities prepare for audits, access partnership information and make relevant changes in a centralized manageable digital records system.
Importance of record retention of signed agreements
For entities managing active and closed agreements in their daily operations, document retention spans beyond administrative housekeeping, but serves as critical risk management strategy that directly impacts their operation. Below is the significance of retaining signed agreements in organizational operations:
i). Preserved executed contracts provide clear evidence of mutual assent, consideration, and enforceability, shielding entities from:
- Penalties,
- Reputational harm; and
- Serve as a cornerstone of its defense. Thus, serves the ultimate evidence or definitive proof of mutual intent, rights and obligations.
ii). Signed agreements form the mandatory foundation for successful contract enforcement or litigation in court.
iii). Proper record retention ensures compliance with legal regulations, supports operational needs and determines when records can securely be destroyed or permanently archived.
iv). Retaining agreements such as vendor contracts, employment agreements are critical for legal protection, financial accuracy, and operational continuity.
v). Resolves disagreements immediately by providing an unambiguous, written source of truth.
vi). Defines the precise legal timelines during which parties can file claims.
vii). Retaining records provide an audit trail of past transactions, thus enabling entities to track their partnerships and business operations.
viii). It strengthens accountability and provides evidence in the event of challenges to business decisions.
ix). Proper records permit quick, efficient access to information and insight into past decisions, aiding in future planning, budgeting, and strategy.
Significance of having secure system for keeping agreements
Secure system for document retention protects sensitive, legally binding information from unauthorized access, theft, breach and accidental loss or deletion. These repositories ensure proper compliance, efficient retrieval during disputes or audits and business continuity.
Common to digital records are ransomware, cyberattacks, hacking and many others. Having a secure record retention system serve as a buffer and dependable storage against these attacks. This ensures that personal, proprietary, and sensitive information is protected.
Laws governing storing signed agreements in the USA
In the United States, the retention of contracts and agreements is governed by a combination of federal regulations, state statutes, and industry-specific requirements. Based on jurisdictions, law governing record retention varies.
Federal Acquisition Regulation (FAR) requires that contract and associated contracts of the federal agencies and contractors be retained for a minimum of three (3) years after final payment, unless otherwise specified.
National Archives and Records Administration (NARA) mandates that federal agencies preserve contract files for six (6) years after final payment to ensure availability for enforcement, audits or Freedom of Information Act (FOIA) requests.
State laws may impose additional requirements, particularly in areas such as employment, healthcare, or financial services, where retention periods can extend to seven years or longer.
In summary, there is no single federal statute prescribing a universal retention period for all contracts. Instead, retention obligations are shaped by the nature of the agreement and applicable regulatory frameworks. For instance, employment-related contracts may need to be stored in compliance with Equal Employment Opportunity Commission rules, while financial institutions must adhere to Securities and Exchange Commission requirements.
Storing of expired signed agreements
Expired agreements, even after termination or renewal, may still carry legal significance. Courts often require access to prior contracts to resolve disputes, interpret obligations, or establish historical business practices. For instance, in the US under the Uniform Commercial Code, written contracts may be necessary to prove compliance with statutory requirements for enforceability.
Organizations are therefore generally advised to retain agreements beyond their expiration date, as they may remain relevant in litigation or regulatory investigations. The mere signing of a new agreement does not automatically extinguish the evidentiary value of the prior one.
Deletion and storage of agreements
Organizations are not legally required to delete agreements immediately upon the end of a partnership or contract expiration. In fact, premature deletion may expose them to liability if disputes arise later.
Retaining expired agreements serves critical functions such as defending against breach of contract claims, demonstrating compliance with regulatory audits, and preserving corporate history. For this reason, many companies adopt retention schedules that extend well beyond the life of the contract, often mirroring statutes of limitations for contract claims, which in most states range from four to six years.
Deletion policies, however, must balance compliance with privacy and data protection obligations. Under statutes like the California Consumer Privacy Act, organizations must ensure that personal data contained in agreements is not retained longer than necessary for legitimate business purposes.
Similarly, federal privacy laws governing healthcare (HIPAA) and financial services impose strict requirements on the safeguarding and eventual disposal of sensitive information. Thus, while contracts themselves may be retained for legal and operational reasons, organizations must implement secure destruction protocols once retention periods expire.
Conclusion
Best practice is for organizations to adopt a documented records management policy that specifies retention and deletion timelines for different categories of signed agreements. This ensures consistency, compliance, and defensibility in the event of litigation or regulatory inquiry. Agreements are typically archived in secure systems until the retention period lapses, after which they are destroyed using methods that prevent unauthorized access. By aligning storage and deletion practices with statutory requirements and industry standards, organizations can minimize risk while preserving necessary legal protections.
Ready to simplify secure document signing? Try a free BoldSign trial and explore our complete e-signature platform.
Need help? Schedule a demo or contact our support team via our support portal.
