What is Considered a Signed Paper?
When a party signs a contract, it is the showcase of their willingness to be legally bound by the terms of the contract. It does not matter whether the contract is merely for the sale of tangible goods, or services, or something else entirely, a contract is simply an agreement that is enforceable by law.
If the contract is for the sale of something that the buyer does not have possession of at the time of the signing, then the seller will, of course, deliver the goods and services after the sale.
The signature signifies the agreement between parties and the intention of being bound by terms and conditions of the contract. A signature may, depending on circumstances, be anything that shows an agreement by the person providing their signature. For example, a printed name may suffice, whereas in some instances initials may only be required; sometimes even a handshake may be binding.
However, putting pen to paper is what most people think of when discussing a contract, and what they recognize as the means of proving that a party intends to be bound by an agreement . A signature must be provided by a person capable of signing a contract.
A signature may appear to approximate a person’s name in print but really is something different altogether. Because of this, sometimes simply writing LOL at the bottom of an email is not a signature. If the court finds that a signature is authentic, such as a digital signature, the signature is considered legally binding on the party who signs the contract.
People are generally comfortable with what is required to make a signature legally binding. This is because they experience signing documents of some sort every day of their lives, someone typically witnesses a contract signing, there are often others who can be called to testify that they witnessed the signing of a contract in a trial. These people can corroborate the signing of the contract.
These persons and documents prove necessary to show that a party intended to be bound by the contract’s terms and conditions.
Essential Components of a Valid Contract
The first requisite to the enforceability of a contract is that there must be a meeting of minds of the parties concerning all the essential elements of it. The second is that a contract must be definite in order to be enforceable. It will not be enforced if the terms are uncertain and not capable of being made certain. The third requisite is that, despite the contents of the contract, it will not be enforced if contrary to public policy.
For example, although a contract relating to sale of gambling machines probably satisfies both of the foregoing requisites, it will not be enforced – even though the parties have agreed on the terms of the contract with reference to the machines sold by seller to buyer – because it is contrary to public policy to permit buyer to operate the gambling machines in violation of law (in this instance).
A contract must also be supported by a consideration. What constitutes consideration is a question of law. The very purpose of having a contract is to obtain that which the party wants and, for that, contract prices are agreed upon to be paid.
An executed contract is one that is instantly fulfilled, and thus, requires no further performance by either party. A unilateral contract is one that is fully performed by one party, and remains executory as to the other. A bilateral contract is one in which there are mutual promises, and each party assumes an obligation towards the other. The most common contractual situation is the bilateral contract.
A condition precedent is an act or event that must occur before the duty to perform a promise arises. A condition concurrent is a duty or event that must occur at the same time, or simultaneously, as the obligation of the other party arises. A condition subsequent negates an obligation that has already been incurred. Any act, event, or fact, that terminates a duty, is one that is a condition subsequent.
A valid contract has five essential elements:
Note that these elements must be met in order for a contract to be enforceable; however, there are some contracts that are not enforceable in the eyes of the law, although they may meet these elements.
The Impact of Signatures on Enforceability
Although not always required, one common way to show that you have entered into a legally binding agreement is to sign a document. Even if a contract does not specifically state that both parties must sign (and there are various reasons why that may be the case), the inclusion of signatures at least serves as some evidence that an agreement has taken place. In other words, both parties would then have paperwork to fall back on if the terms of the contract were ever broken.
Specifically, the written text of a contract with signatures creates evidence for the work courts do called "construction and enforcement of contracts." Construction involves figuring out what the terms of a contract mean; enforcement involves attempting to force compliance with a contract when one party is not fulfilling obligations under it.
When a contract is signed by both parties, they are showing that they have read the document and agree to the terms. A judge, jury or other adjudicating body, therefore, can take the evidence of these signatures into account. For this reason, addition of signatures is one important factor in holding enforceability.
When Can a Signed Copy Be Contested?
When a signed paper may be challenged. When you meet with your attorney, you hand him or her a signed complaint or a signed loan document, whatever it may be. Quite frequently our clients ask us the following: "Is there going to be a problem with this document?" Or they might ask, "Is this document going to be in any way challenged by anybody?" Well, certainly, there can be questions about the validity of a signed piece of paper after you sign it and present it to your attorney.
In most cases, it is going to be easy for your attorney to advise you that the document you are providing is in fact, signed, and there are no issues which may call into question the validity of it. But what if somebody says, "You know what, there are three other people named on this document and they didn’t sign it," or "The person who was supposed to sign the document was out of the country at the time that the document came to the attorney for recording, and there is no evidence that the person came back to the country," or "There’s nothing attached to the document that shows a date." The failure to date a document may seem trivial, but it could make the document ineffective as a legal instrument.
We see a lot of challenges to documents on the basis that the person who signed it did not in fact have the authority to sign it. That is very common when a corporation is involved. You must always know if your client is an officer of a corporation . You may be dealing with a person as individual who says they are the president of the corporation, when in fact, they have no remaining connection with that corporation. Or they are an officer or manager of a partner in an LLC. So you have to make absolutely sure that the signatory to the document has the authority to sign for the entity that the document evidences.
Is the printed name on a document the same as the signature? Yes, it is. Whatever the intent of the signer is, the printed name is exactly what it represents. So you should make sure that that is also an accurate representation of the signer. For example, if the signer of the document is "John Doe, P.A." And John Doe’s name is filled in as the signature, that is a correct representation of the signer. In other words, the capital letters, the periods, the space and the comma after the "A" in "P.A" are all important. If the signer is "John Doe, M.D." And there is no period between the "M" and "D," that is not a correct representation of the signer. These types of small aspects of the signatures could become very important in the future. You might miss it today as a minor point but somebody else may come in and say, "No, that signature is not valid because John Doe is an M.D., not an M.D." or you missed the period, or whatever it is that is in dispute.
So essentially, you have to be aware of the details of the signature, so you don’t look back on it in the future and wish you’d done something differently that would have clarified the points we just went over.
Professional vs. Personal Digital Signatures
Many business owners and managers have likely seen some version of the claim that a digital signature is just as good, or better, than a handwritten signature. This Digital Era thinking has gained popularity lately, but given the recent history of information hacks and security breaches, employees who sign or accede to agreements electronically may want to take a close look at the actual terms of the contract before clicking "accept" or "I agree", and closely consider the use of electronic contracts in general.
In order to understand why digital signatures should be approached with caution, employers should consider how digital signatures are different from handwritten signatures.
According to www.investopedia.com, an electronic signature is "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."
A digital signature is a type of electronic signature that is based on a specific technology. Digital signatures are used in conjunction with a public key infrastructure (PKI), in which a third party provides the means by which a digital signature can be verified. This third party is called a certificate authority, or CA, and according to the Federal Trade Commission, a CA "is a trusted third party that issues digital certificates for public key signatures, to confirm that it is the signer’s public key and that the signer is indeed who he or she says he or she is."
A digital signature is far more secure than a traditional signature in this way: a PKI certificate, which is a document which identifies the subject of the certificate, is bound to a public document through encryption. The system allows any user who knows the public key to verify the certificate matches the person it claims to belong to. The CA is responsible for issuing the certificate, authenticating the identity of the certificate holder, and revoking the certificate if the holder is found to be at fault in any way.
Digital signatures or electronic contracts have not yet been upheld in all situations by every court. These contracts are subject to federal laws (The Electronic Signatures in Global and National Commerce Act ("E-SIGN")) and state laws ( The Uniform Computer Information Transactions Act ("UCITA")).
Employers should weigh the benefits and risks given the specific situation to determine whether use of digital signatures and electronic contracts would benefit and protect the company.
How to Make Sure Your Signed Paper Holds Up
The following steps may help minimize your exposure to liability by maximizing the chance that the documents you sign will be upheld in court.
A. Ensure Document is Clear, Complete and Accurate. A legible and concise agreement should be signed. Even a seemingly innocuous mistake in an initialed or signed document can become the basis for an unforeseen liability. Therefore, it is prudent to cross-reference and proofread the underlying document prior to signing it.
B. Sign Original Copies. It is legitimate to require that the original copy of the document is signed. Several copies of the document may be required , nonetheless, under various circumstances and for very good reasons. Over-signed, stamped or initialed documents may cause problems.
C. Maintain Evidence of Signature. The signature itself should be retained on the original or on a copy of the document that can be separately tracked. The signature should not be affixed directly onto the paper when a copy of the document must be forwarded to another party (e.g., via "wet" signature). Blank pages are sometimes used to prevent this problem. Paperless documents, including, notably, e-mails with electronic signatures, may be used with good results.