In our modern world, signatures have moved beyond the traditional pen-and-paper format. From fancy cursive names to simple initials on dotted lines, signatures show that you have read a document and accepted its terms. So, what makes something a signature? Does it have to be your name? Alternatively, can it be any unique marking on a piece of paper? What about electronic signatures? This article explains the form your signature must take to be legally binding.
What Do Signatures Indicate?
When you sign an agreement, you show that you have read and accepted the terms. It does not matter whether you have read the terms; if you sign the agreement, it will automatically be binding on you unless an exception applies.
Most people agree to a contract by writing their name in cursive or a fancy font on the dotted line. However, this method of acceptance is more of a convention than a requirement. Courts have taken a broad interpretation of the definition of a signature, including any mark on paper indicating that the parties accept the terms of an agreement.
Can I Use an Electronic Signature?
People are now slowly moving away from printing out and physically signing contracts, opting for the convenience of electronic documents and signatures instead. This can take many forms, including typing your name on a Word document, ‘stamping’ a contract with a digital image of your physical signature, selecting an option in e-signing software, or signing a soft copy document on a touchscreen with your finger or a stylus. The Electronic Transactions Act recognises electronic signatures in Australia, with slight differences at the state and territory levels. So, what makes an electronic marking a signature? How can you ensure your online agreement is binding?
First, you need to understand the purpose of a signature. It shows that the parties accept and agree to be bound by the contract terms. An electronic signature is any electronic marking that carries the intention of being a party to a document. For example, scanning a handwritten signature can be electronic if it shows that the party agrees to the terms of the document they are signing.
To ensure it is reliable and truly representative of a party’s acceptance of the terms of a contract, an electronic signature must also include the following:
- Identification: a method that identifies the person signing and their intention regarding the information communicated. A good signature on a contract indicates that the person signing intends to be legally bound by the terms;
- Consent: that the parties consent to electronically signing the document; and
- Reliability: that the method of signing is reliable and appropriate given the circumstances and purpose of the document.
What are the Exceptions to Electronic Signatures?
Although most contracts in Australia can be validly signed electronically, some documents still require physical ‘wet ink’ signatures or another notarial process. These include:
- deeds in WA, SA, NT, ACT and TAS. NSW, VIC and QLD allow for deeds to be signed electronically. However, NSW has additional e-witnessing requirements which must be met;
- statutory declarations and affidavits, which require a physical witness present;
- powers of attorney in certain states or territories;
- signatures by companies under the Corporations Act 2001;
- certain real estate transactions, including mortgages;
- documents which must be personally served (in NSW and QLD);
- official Commonwealth documents, including passports; and
- wills and other testamentary documents.
You should always check the relevant state or territory legislation before using an electronic signature or asking someone to witness your signature electronically to ensure that it is a valid method of acceptance.
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Key Takeaways
Signatures prove that parties have agreed to the terms of a document and want to undertake the legal obligations contained within. Courts have taken a broad interpretation of what signatures need to look like. Any identifiable digital or physical mark may constitute a legally binding signature, even if it is an illegible or scribbled signature.
As electronic signatures become more common, understanding the relevant legislation and determining when they are legally valid becomes essential for lawyers representing their clients. Moreover, you need more than just knowing the acceptable forms of signatures. You must also consider additional factors to guarantee the signatures are reliable and represent a party’s acceptance. To prevent rejection of the document, participate in early discussions with parties to agree on the format and acceptance of signatures in a transaction. Also, follow proper legal procedures.
If you have questions about what a signature should look like, 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 signature shows that you accept the document’s terms. It can be a cursive name, initials, or even a simple mark like an “X”. Electronic signatures are valid if they include identification, consent, and reliability measures.
No, some documents still need physical signatures, such as deeds in certain states, statutory declarations, powers of attorney, real estate transactions, and wills. Always check relevant state or territory laws to ensure validity.
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