What Are the Rules Regarding Signatures in Contracts?

The signature is the most common way to indicate that you have read and agreed to a contract, even if one's signature is so unique and stylized as to be virtually illegible. Also, as contracts continue to move into paperless electronic formats, the criteria for what constitutes a "signature" has been substantially broadened.

Whichever form it takes, the key importance of the signature is proof that an offer has been considered and accepted. But are there any rules to help determine whether a signature is valid, or even if a signature is necessary? Actually, there are a few, and this article will review some of the rules.

For more information on contract law, see FindLaw's Drafting Contracts and Contract Law sections.

Make Your Mark

Usually, a signature is simply someone's name written in a stylized fashion. However, that is not really necessary. All that needs to be there is some mark that represents you. It can be -- as many signatures end up -- a series of squiggles, a picture, or historically, even the traditional "X" for people who couldn't read and write. As long as it adequately records the intent of the parties involved in a contractual agreement, it's considered a valid signature.

Usually this mark is made by a pen, but not necessarily. The signature can be made by anything that marks the paper. Pencil is not favored because it can smudge and be erased, but a signature made with a pencil is equally valid as a signature in pen. Signatures can also be made with stamps or with electronic means, since these are all different forms of writing implements.

If you are unable to sign the contract yourself, you can always give someone, called an "agent," the authority to sign on your behalf.

Electronic Signatures and the E-SIGN Act

In response to largescale migration from paper to digital formats in business records and contractors, federal lawmakers passed the Electronic Signatures in Global and National Commerce (E-SIGN) Act in 2000. The law essentially recognizes the validity of electronic records, contracts, and signatures as having the same force of law as their paper-based counterparts. Since it is federal law, it affects all contracts considered to engage in interstate commerce; but states often have their own laws with regard to electronic signatures as well.

The law also allows individuals to choose a paper (or otherwise non-electronic) format instead. Consumers must be given the opportunity to "consent electronically, in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent."

No Signature Required

Sometimes, signatures aren't even required. Business people with existing relationships can be considered to be in agreement when they exchange form contracts. A simple assent from your email account may also be considered a "signature" because it indicates your personal agreement to something.

Whatever method you choose, courts will consider whether you made the "signature," intended to make the signature, and whether you intended the signature to signify your agreement to the contract. If the court can find these three things, that it will consider your contract binding.

Not Sure About the Validity of a Signature? Play it Safe and Call an Attorney

Whether it's a formal signature, an electronic signature, or simply an "x," you want to make sure the signatures on your contracts are valid. Invalid contracts can result in wasted resources, lost opportunities, or worse. If you have questions about signatures or any other aspect of entering into a legally enforceable contract, talk to a small business attorney specializing in contracts near you.