Most people hear the term “wet signature” and are automatically confused and have no idea what you’re talking about, but it’s quite simple. This Business Kitz blog is going to explain what a wet signature is and when and why it is used.
What is a wet signature?
A wet signature is just a normal traditional signature. ‘Wet’ refers to the ink or pen that is used for the signature. The wet signature refers to the physical act or signing of a document, contract or agreement with a pen-to-paper motion. This, therefore, means that the documents intended to be signed must be printed and not electronic documents.
What is an eSignature?
An eSignature or also commonly referred to as an electronic signature refers to any electronic means of indicating a person’s signature as a form of authority or consent. eSignatures have been legally binding signatures since the enactment of the Electronic Transactions Act 1999 (Cth).
There are various forms of accepted eSignatures which include:
- Typing your name;
- Inserting a photo of your handwritten signature; or
- Electronically drawing your name
When is a wet signature required?
Whilst eSignatures are legally acceptable to sign with on most contracts and agreements, there are still a few types of contracts that require the use of a wet signature for valid execution.
The three main types of contracts that still require a wet signature:
Execution of a deed
There is often confusion whether deeds that are signed by individuals must be wet signatures. The two things that are required when signing a deed are:
Witnessing of the deed: All deeds require a witness to be present during the signing of the deed. This implies that the person signing must be signing the deed, must be using pen and paper, and the witness must be present.
The deed must be presented as a hard copy: if a deed is only available as an electronic copy, this automatically makes the deed invalid.
There is currently a lot of debate surrounding whether eSignatures on a deed are legal. Many people will argue that eSignatures are a legal form of signature and therefore are allowed whilst others say the complete opposite. There is a great risk when signing with an eSignature, that it may make the entire deed invalid and therefore generally people do not want to take the risk and sign using wet signatures.
Execution of documents under section 127 of the Corporation Act 2001 (Cth)
Section 127 of the Corporations Act 2001 (Cth) regulates how companies can legally sign deeds and other official documents. This regulation outlines that companies may sign any document, including deeds, without a witness by:
- A sole director;
- Two directors; or
- A director and the company secretary.
During the start of the COVID-19 pandemic, both State and Federal Governments introduced temporary legislation to allow deeds to be signed off with eSignatures. This legislation has now since expired as of March 2021. This now means that the initial rules relating to companies signing deeds and other documents using wet signatures are reinstated.
Where the type of signature is explicitly stated
Some documents explicitly prohibit the use of certain types of signatures and only allow wet signatures. A common document that frequently specifies wet signature requirements is land titles. It’s important to research the requirements of your documentation to ensure that you are signing it correctly and to ensure its validity.
If you require assistance determining whether you need a wet signature for your documents, our sister company, Legal Kitz can assist, whilst ensuring that your matter is as time and cost-efficient as possible. We provide a FREE 30-minute consultation to set you in the right legal direction. Click here to book a FREE consultation with one of our highly experienced solicitors today or contact us at firstname.lastname@example.org or by calling 1300 988 954.