Your Guide to Signing Legal Contracts

By: Kristy DeSmit | March 18, 2014

Your Guide to Signing Legal Contracts

Throughout your lifetime, you will have to sign your name many times. Whether you are agreeing to an employment contract, finalizing the mortgage details for your home, or bearing witness to the execution of a document, your signature is required to seal the deal.

All documents, not only legally binding contracts, demand for an individual’s signature.

As the universal symbol for proof of agreement, it’s important you know why, when and how to sign your name, as well as who should sign where.

What is a signature?

A signature is a mark that identifies the individual who created it. It commonly spells out a person’s name. Unless otherwise legally expressed, a signature can be written with loops, ascenders, descenders, special characters or signs, as long as it remains consistent from contract to contract.

Why do I have to sign?

Most contracts do not become legally binding until it has the signatures of each party involved. By signing off on a document, it confirms each party’s agreement and intention of executing the terms in the contract.

Who signs?

Signatories refer to the parties (individuals) who sign an agreement. A signatory must be at least 18 years old or older and involved in the execution of a document in order to sign their name. For instance, if you and your wife-to-be are creating a prenuptial agreement, then you both would be signatories.

A signatory can refer to a human, corporation, Limited Liability Corporation or other entities, such as a non-profit organization or government body. If a company is involved in a contract, such as a business purchase agreement, an individual whom has legal authority would sign the document on the company’s behalf. A company signatory can be specified through a directors’ resolution, resolving that the director or officer be authorized to sign documents for the corporation.

Individuals can create a power of attorney and appoint an attorney-in-fact to sign real estate, financial, business, and other legal documents on their behalf. As an important duty, this responsibility should be assigned as a future precaution, particularly if an individual suddenly cannot execute their own affairs due to poor health.

Each legal contract, state and bank institution has its own requirements regarding whether a witness or notary public must sign and authenticate the document.

Witnesses are a neutral third party, who have the responsibility of witnessing each signatory’s signature. The witness does not have to be familiar with the terms of the agreement, but their role is important for proving a contract’s legality in the court of law. Some contracts require a minimum of two witnesses. He or she cannot be involved in the intentions of the contract. For example, a beneficiary of a last will and testament cannot bear official witness to its execution.

A notary public is a state licensed official who authorizes the identity of each signatory and bears witness to the execution of a document. They also commission oaths, certify copies of documents and provide acknowledgements. Use of a notary public depends on each state’s legislation or financial institution requirements.

When a notary public verifies the execution of a document, it becomes “self-authenticating”, meaning the validity of signatures does not have to be proved in court.

Where do I sign?

The last page of most legal documents is referred to as the signing page. While each document varies, it generally contains a solid line with each signatory or company name underneath, specifying where to sign. There you would sign your name and date. You may also be required to print your name or fill in your contact information below.

Though not legally required for most forms, the last will and testament and power of attorney usually instruct each party to initial every page in addition to signing the last page.

Initialing each page proves all terms were read and agreed to. Specifically in a last will and testament, signing initials is good practice to prevent future misunderstandings with an individual’s assets after their death. Although there is no formal space for initials, each party should try to initial the same spot on each page.

To make small changes to a legal document, the term in question must be crossed out, altered, and initialed by each party in order to become legally binding. Larger changes may require an amendment or separate document.

Often a notary public has a separate section on the signing page to certify their acknowledgement of the contract.

Additionally, an affidavit of execution may also need to be signed on behalf of the notary or witness to make sworn statement of a contract’s content, and each party’s age, identity and signatures. They may use a stamp or seal as formal authentication of the document.

Normally, the physical location where the document is signed does not matter, so long as each party signs in front of the witness or notary public.

If you would like your document to be valid in another country, your state or government officials need to issue an authentication certificate, confirming the document’s authenticity. Obtaining a certificate may depend on which country you want your document to be valid. Always check with your state officials prior to executing the document.

How do I sign?

You should sign legal documents how you would usually sign a check, government identification or other documents. For instance, if you are addressed by your middle name on paper and in person, sign that way unless otherwise stated. A notary public may ask to see your identification card to confirm your identity and compare signatures.

When signing a contract, best practices suggest using a color other than the color of the agreement terms to reinforce authenticity and prevent anyone from creating fraudulent copies of the contract. Blue is the norm. Avoid using pencil or red, pink and orange ink — basically anything that can be tampered with or is hard to read.

During the official execution of the document, each party must be in sound mind, meaning they must be capable of understanding the terms of the contract and not under the influence of drugs or alcohol.

Furthermore, each party should take their time to read the entire agreement before signing, with the exception of witnesses. Ensure you have a complete understanding and ask for terms to be clarified before legally putting your pen to paper.

When do I sign?

The date you sign a legal document depends on your situation and needs. For instance, if you are leaving the country next week, you would want your power of attorney to be signed and notarized before then.

Documents become effective the day it is signed by all parties. If parties sign on different days, it becomes effective on the day the last party signed it. You cannot postdate or predate signatures on legal contracts.

Occasionally contracts will specify when it should be signed by. This is common in business agreements or real estate contracts, when an offer is contingent on timing.

See: Signing Legal Contracts [Infographic]

Was this article helpful? What other best practices should individuals follow when signing off on legal agreements? Share your thoughts below!

Photo: ©iStock/AtnoYdur

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Kristy DeSmit

Marketing Writer at LawDepot
Kristy is an avid blogger, Twitter enthusiast and company legalese interpreter.
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