What is a wet signature?
Wet signature is the use of a physical signature, made by hand with a pen ("wet ink"), to bind the party signing to the terms of the document upon which they leave their signature.
Contracts usually require, or at least encourage, both parties (or all parties, if there are more than two) to sign the document before it becomes enforceable.
Note that a signature is not necessarily required in order for a contract to be concluded (read more about the position under English law). However, using some type of signature is still seen as a crucial part of the process of concluding a contract.
What does 'wet sign' mean?
Until pretty recently, securing a signature on a contract always meant physically dragging a pen across the page to leave a signature, then giving the same pieces of paper to the counterparty and having them do the same. This would be done with 'wet' ink, which is why we talk about a contract needing to be 'wet signed'.
eSignature has changed that picture, with a workflow that involves the electronic signing of a PDF becoming common. Instead of a wet signature being required, parties can use software to electronically ‘sign’ a document and fulfil the requirements needed to make it enforceable.
However, a handwritten signature of some kind is still needed in various jurisdictions and situations. What are they?
When is a wet signature still required on a contract?
This question relates to the validity of the contract, and its answer depends on the jurisdiction in which parties are based, as well as the content and purpose of the contract. For the most part, eSignatures have been recognized as valid and enforceable across the world, but certain situations still ask for wet-ink signatures. Some examples include:
In English law:
- documents required to be filed with the UK tax authorities or Land Registry (source)
In US law:
- promissory notes and notarized documents, mortgages, deeds of trust, and other collateral documents (source)
In Canadian law:
- promissory notes, personal guarantees, notarized mortgage documents, and security registered with the Bank of Canada (source)
In Germany law:
- a transfer or pledge of shares in a GmbH; a transfer of real estate; or a mortgage/land charge over real estate would require to be notarised (source)
Various other jurisdictions have formal and informal requirements relating to wet ink signatures and notarized signatures, as well as related processes like initialling each page. For a brief rundown, visit this resource or check with your counterparty/counsel.
What’s wrong with wet signatures?
There are good reasons why eSignature has become so prevalent in contract process, both for individuals and businesses. There’s obvious friction and delay involved in the requirement to physically transfer one bundle of paper to another party - the time savings of sending documents electronically are transformative.
There’s also less risk involved - a physical document is more vulnerable to being lost, stolen or damaged than a contract electronically and securely stored in the cloud. If the document was created in an electronic format, there’s no need to scan and save its physical impression in order to be able to store it digitally.
The friction and delay involved in a wet signature-based process also gets significantly worse with scale. Some of the companies we work with at Juro process hundreds or even thousands of contracts a month. For one customer, before automating routine contract workflow with Juro, this meant the CEO spending half a day a week sitting and physically signing hard-copy contracts by hand.
This is a poor use of anyone’s time, but particularly the kind of person likely to be a business’ authorized signatory - typically a CEO, CFO or similar senior figure.
Through contract automation with Juro, they were able to ditch the wet signature and sign dozens or hundreds of contracts electronically, simultaneously, with one click. If you're looking to do the same thing, hit the button below. If not, read on to find out more about wet ink signatures.