A signature is the most common way of showing acceptance of a contract, even if it’s illegible. When you sign something, be it a contract or any form of agreement, it indicates that you have read, understood and agreed to the content of that document. Many different contracts use signatures, which naturally have legal implications. This article will discuss the legal effect of a signature, what it is, when it is valid, and its importance.
What Happens When I Sign Something?
If you sign a contract, one may assume you have read the content. Even if you do not read all the terms, your signature legally verifies that you agree to enter the contract. To be bound by a contract is to agree to carry out all of your obligations outlined in the contract. Failure to do so can result in a Court order compelling you to perform. Therefore, you must read any document you plan to put your signature to, as once signed, it is binding.
What Constitutes a Signature?
A signature is usually a stylised version of your name or initials. We often think long and hard about how our signature should look, but from the legal perspective, it rarely matters. To be legally recognisable, all it requires is some mark of intent. Whether it is a squiggle, an “X” to mark the spot or a clean name. If the marking records your intent to enter a binding contract, it is generally an adequate signature for the purposes of the law.
Continue reading this article below the formWhen is a Signature Valid?
In the past, signing something was as simple as putting pen to paper. Now, the signature has had to evolve with the evolution of online business relationships and worldwide trading.
Electronic Signatures
Since 1999, at a national level, the law has recognised the validity of electronic signatures. They now essentially have the same legal effect as a wet ink/paper signature. Each state and territory has slightly different rules and exemptions for electronic signatures. Overall they are valid if they meet the following requirements:
- a consistent method is used to identify who is signing and what their intention is;
- this method is reliable and proven as a sufficient way to identify the person and indicate their intention; and
- the person signing agrees (either directly or indirectly) to use of this method.
If these requirements are met, and the other side agrees to receive information and signatures electronically, you can sign electronically. Electronic signatures may become difficult to verify if you cannot accurately prove the identity of the person signing. Often, signatures require a witness to verify identity. However, the nature of electronic signatures eliminates this requirement. You should therefore ensure that the digital signature program you use is vetted and reliable for your digital signature to be valid at law.
When Do I Need a “Wet Ink” Signature?
Thus, you may choose to sign with wet ink to avoid confusion.
Some documents must be signed following Section 127 of the Corporations Act 2001 (Cth), which deals with how companies can sign documents. This section states that companies may sign with:
- a sole director;
- two directors; or
- a director and the company secretary.
When is it Invalid?
You agree to be bound by a contract when you sign it. This creates obligations on you to fulfil your duties under the contract, so you must know what they are.
However, in some circumstances, you may not understand the extent of your obligations. This may not be due to any fault of your own but because of the other party’s conduct. This may occur when the other party unfairly obtains your signature by misrepresenting the contract to you. Alternatively, they may force you to sign under duress or undue influence. In those cases, the court may consider that you did not have the full capacity or understanding to be able to sign. Accordingly, the signature may be invalid.
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Key Takeaways
Your signature is a mark that represents that you understand and agree to a contract. Your signature can be provided electronically. However, there are limited circumstances where this may be invalid. Therefore, you must confirm how you may provide your signature and ensure you read and understand the contract. Alternatively, you should have a contract lawyer go through the contract to point out your important obligations or hidden pitfalls.
If you need help with contract signatures, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A wet ink signature simply means a signature made by your hand on paper with a pen. It refers to the physical process of signing a document, though it can involve electronic elements, such as scanning a wet ink signature and sending it as a pdf.
Data security is always a concern with sharing any important details online. However, electronic signatures are no more vulnerable to tampering than wet ink signatures. Electronic signatures can include geo-location data and trails of authentication, so they can be verified and protected if you are using a reputable online signature provider.
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