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What Are the Rules Regarding Signatures in Contracts?

The signature is the most common way to show that you have read and agreed to a contract. This longstanding practice streamlines approval workflows. It's crucial for business owners across various sectors. Even if one's signature is so unique and stylized as to be virtually illegible, it still carries legal weight.

There is a shift from traditional handwritten signatures toward digital signatures. Today, companies offer e-signature solutions that automate the process of getting documents signed. These tools have integrations with various customer relationship management systems (CRM). They improve the customer experience. They allow you to sign documents on mobile devices, reducing the hassle of manual paperwork.

As contracts continue to move into electronic formats, the criteria for a signature has broadened.

Whichever form it takes, the key importance of the signature is proof that an offer is accepted. But are there any rules to help determine whether a signature is valid or even if a signature is necessary? There are a few, and this article will review some rules. These rules are crucial, especially for business contracts, sales contracts, and legal agreements like partnerships and warranties.

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

Make Your Mark

Usually, a signature is someone's name written and stylized. However, that is optional. All that needs to be is some mark that represents you. It can be a series of squiggles, a picture, or even the traditional "X" for people who can't read and write. As long as it records the intent of the parties involved in a contractual agreement, it's a valid signature.

Usually, this mark is made by a pen, but not necessarily. Anything that marks the paper can be a signature. Pencil is not favored because it can smudge and be erased. But a signature made with a pencil is as valid as a signature in pen. Signatures can also be made with stamps or electronic means. This is because they are different forms of writing implements as long as authentication and security standards are met.

Signatures on digital documents are becoming increasingly relevant for

  • New employee onboarding processes
  • Procurement procedures
  • Sales operations

E-signature software helps automate and streamline these procedures.

If you cannot sign the contract yourself, you can give someone the authority to sign on your behalf.

Electronic Signatures and the E-SIGN Act

In response to large-scale migration from paper to digital formats in business records and contracts, federal lawmakers passed the Electronic Signatures in Global and National Commerce (E-SIGN) Act in 2000. The E-SIGN Act reinforces the legality of digital signatures in business contracts. The law means electronic contracts and signatures are legal as long as the consumer consents. E-SIGN also allows individuals to choose a paper format instead.

Since it is federal law, it affects contracts involving interstate commerce. This law is particularly important to business owners operating in multiple states.

States often have their own laws on electronic signatures as well.

No Signature Required

Sometimes, signatures are optional. Business people with existing relationships can agree when they exchange form contracts. A simple assent from your email account may also be considered a signature. This change has revolutionized the signing process, making it more accessible and efficient.

Whatever method you choose, courts will consider the following:

  • Whether you made the signature
  • Whether you intended to make the signature
  • Whether you intended the signature to signify your agreement to the contract

If the court can find these three things, it will consider your contract binding.

Witnesses Required

In some legal scenarios, a witness must validate the authenticity of the signer's identity. Some documents are important enough to require a witness or a notary public. Some examples are estate planning documents such as a will or a power of attorney.

Unsure About the Validity of a Signature? Play It Safe and Call an Attorney

Contract management can be a complex area. Using e-signature solutions can help simplify the process while ensuring legality and efficiency. As contracts move into electronic formats, the criteria for what makes up a signature has broadened. It's no longer just about pen and paper. Electronic signature software, application programming interfaces (APIs), templates, and mobile apps are significant in modern document management systems.

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

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