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Signatures can range from fancy squiggles on dotted lines to initials. They indicate that you have read a document and accept the terms of the agreement. 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 whether your signature needs to be your name or initials, or whether it can be any marking. 

What Do Signatures Indicate?

When signing an agreement, you are indicating that you have read and accepted the terms in the document. It does not matter whether you have actually read the terms. If you have signed the agreement, it will be binding.

Most people indicate agreement to a contract by putting their name in a fancy font on the dotted line. However, this method of acceptance is more of a convention than a requirement. The courts have taken quite a broad interpretation to the definition of what can be a signature. It can be any mark on paper that indicates the parties accept the terms of an agreement.

For example, a party that is unable to sign a contract because they have a physical disability may indicate their agreement to the terms of a contract using a cross (X) as a signature. Signatures can also be stamps. However, to avoid confusion, it is best practice to use your signature when agreeing to the terms of a contract.

Can I Use An Electronic Signature?

Parties are now slowly moving away from printing out and physically signing contracts. Therefore, electronic signatures are recognised in Australia under the Electronic Transactions Act. So, what makes an electronic marking a signature? How can you ensure your online agreement is binding?

It all goes back to the purpose of a signature, which is to show acceptance of contract terms. An electronic signature is any electronic marking that carries with it the intention of being bound by the terms of a document. For example, the scanning of a signature can be an electronic signature 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 factors:

  • a method that identifies the person signing and their intention concerning the information communicated. For a contract, a signature must indicate that the person signing intends to be legally bound by the terms;
  • the parties consent to electronically signing the document; and
  • the method of signing is reliable and appropriate given the circumstances and purpose of the document.

For example, a signature in an email may be binding if it is sent by a person with a recognised email address who is identified in the email. In this case, both parties also need to consent to the agreement being executed in this way. However, if the email is sent by someone with an unknown email address and who is not identified in the email, the accompanying electronic signature may not be sufficiently reliable and therefore not binding.

What Are the Exceptions?

Some documents require handwritten signatures or another notarial process. These include:

  • statutory declarations requiring a witness;
  • powers of attorney in certain states or territories;
  • official Commonwealth documents like passports; and
  • wills and other testamentary documents.

You should always check the relevant legislation before using an electronic signature to ensure it is a valid method of acceptance.

Key Takeaways

Signatures show that parties agree to the terms of a document and want to undertake the legal obligations in the document. Courts have taken a broad interpretation of what signatures need to look like. Therefore, any mark that indicates your agreement to the terms of a contract may constitute a signature.

Electronic signatures can also indicate agreement. However, courts need to take into account additional factors to ensure the signatures are reliable and genuinely represent acceptance. If you have any questions, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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