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Rapid developments in technology have changed many things in our lives, from the efficiency of the workplace to the way that 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

Put simply, 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 several instances where the law requires you to physically hand write your signature. These include:

  • documents that require a witness;
  • court documents;
  • documents that you need to serve personally;
  • certain types of deeds; and
  • wills.

However, these legal requirements widely differ depending on which state or territory you are in. For example, in NSW, it is possible for you to create a deed in electronic form and electronically sign it where one witness who is not a party to the deed attests it. On the other hand, you cannot generally sign a deed electronically in Western Australia.

Furthermore, the COVID-19 pandemic has meant that different states and territories will accept electronic signatures during lockdown periods. However, some of these amendments are only valid for a brief period. For these reasons, you must seek the advice of a lawyer if you are uncertain about the requirements of a signed document in your state or territory.

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. However, when you use electronic signatures, you must ensure that:

  • you have used a method to correctly identify the other person entering into the contract and have some indication that this person approves of the contract;
  • the method you have used to identify the person is reliable and appropriate for your electronic communication; and
  • you and the other person have consented to use this method.

As mentioned above, there are some limits to using wet signatures. Importantly, a signature can make or break commercial arrangements. Therefore, you must seek legal advice to ensure you are signing contracts correctly. This is especially true if you are unsure whether your use of an electronic signature is legally binding.

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Further Considerations

Of course, the legal requirements in different states and territories will principally determine which signature you use when signing contracts. However, where there is the option to use either signature, you should consider the following points.

1. Certainty

When it comes to witnessing and signing documents online, there is a broader scope for fraudulent conduct than there would be in real life. Whilst the Covid-19 pandemic has seen temporary changes in the way witnesses can attest to certain documents, most lawyers would recommend that you take a precautionary approach. This would mean opting for wet ink signatures and having a witness physically present where possible. After all, you should note that 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 that there is a high level of certainty in your business transactions.

2. Time Delays

On the other hand, not using a digital signature can leave you prone to time delays. When it comes to wet signatures and hard copy legal documents, you need to factor in transport time and costs. These factors can affect the speed at which you or your business enters into commercial arrangements. Furthermore, considerable delays in the delivery of sale contracts can also result in the loss of business as a potential client might choose to explore other options.

Key Takeaways

All in all, there are different legal and practical considerations that you should note when executing commercial contracts. 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 can 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.

For this reason, if you need advice on how you should be using a wet signature or an e-signature, LegalVision’s experienced contract lawyers can help on 1300 544 755, or you can complete the form on this page.

Frequently Asked Questions

What is a conformed signature?

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’. 

Is a typed name considered an electronic signature? 

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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