Rapid technological developments have changed many elements of our lives, from the efficiency of the workplace to how we sign contracts. As businesses begin to convert their paper transactions into electronic records, there are some subtle differences you should be aware of in terms of the difference between a wet (handwritten) signature and an e-signature.
Wet Signatures
A wet signature refers to a handwritten signature that people use to sign a physical document. Indeed, wet signatures are becoming increasingly less common in our digitised world. However, there are still some instances where the law requires you to physically handwrite your signature. These include:
- documents that require a witness;
- court documents;
- documents that you need to serve personally; and
- wills.
The Federal and certain State governments have passed legislation to allow for the electronic execution of company documents:
- Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (CA Act); and
- Electronic Transactions Amendment (Remote Witnessing) Act 2021 (NSW) in New South Wales.
Importantly, do not assume that you can electronically execute a document as there are different requirements depending on where your business is based. Indeed, consider state and territory laws before relying on federal law amendments. We have set out an example in the table below for clarity.
| Jurisdiction | Deeds (form and execution) |
| Federal Government | Deeds may be in electronic form and signed electronically. It does not need to be witnessed unless under common seal or delivered to be validly executed. |
| New South Wales | Deeds may be in electronic form and signed electronically. |
| South Australia | No changes to existing requirements i.e. physical witness or ‘wet ink’ signatures. |
Electronic Signatures
On the other hand, a digital signature involves you inserting text or a picture of your signature to indicate your acceptance of the document electronically. The law recognises that electronic documents and electronic signatures are valid as legally binding signatures in most business transactions.
Note that consent is no longer strictly required for documents under the Corporations Amendment Act. Importantly, you must be able to reliably identify the individual. Notably, a signature can make or break commercial arrangements. Therefore, it is prudent to seek legal advice, especially if you are unsure whether your use of an electronic signature is legally binding. This will ensure that you are signing contracts correctly.
Continue reading this article below the formFurther Considerations
While there is now the flexibility of using either a wet or digital signature, you should still consider the following points:
1. Certainty
When it comes to witnessing and signing documents online, there is a broader scope for fraudulent conduct than in real life. Whilst the Covid-19 pandemic has ushered in changes in how witnesses can attest to specific documents, it is still prudent to be careful when signing and witnessing documents. After all, if you wish to enforce a contract, the legal burden rests on you to prove that the other party validly signed the document. For this reason, you want to ensure a high level of certainty in your business transactions.
2. Time Delays
On the other hand, not using a digital signature can potentially delay business. You need to factor in transport time and costs regarding wet signatures and hard copy legal documents. These can affect the speed at which you or your business enters commercial arrangements. Furthermore, considerable delays in the delivery of sale contracts can also result in losing business as potential clients might explore other options.
Key Takeaways
There are different legal and practical considerations you should note when executing commercial contracts. First, consider your circumstances and the surrounding laws before choosing between a wet signature and an e-signature. A wet signature refers to your handwritten signature used on a physical document. On the other hand, an e-signature can be a digitised picture of your handwritten signature or involve you signing a soft copy of a document using a touchscreen device. Whilst the law considers e-signatures to be legally binding signatures in most instances, it will depend on the specific legal requirements of the state or territory in which you are signing.
If you need advice on how you should be using a wet signature or an e-signature, LegalVision’s experienced contract lawyers can help. 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 conformed signature is a typed signature that indicates that the appropriate person has signed the original document. A conformed signature should take the following form: ‘/s/ name of the person who signed the original document’.
Generally, a typed name will be considered an electronic signature. Other forms of an electronic signature include an image of your handwritten signature or using a stylus to write your signature digitally on a touchscreen device.
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