A wet signature refers to someone endorsing a physical paper document by signing their name with a pen (“wet ink”). Today, concluding contracts and agreements almost never require a wet signature, and various forms of electronic signatures have replaced them. The ability to electronically sign a document or give approval has made contract management much more streamlined. As a result, companies that still primarily rely on wet signatures end up wasting valuable time and resources.
By implementing electronic or digital signatures, your company can save time, reduce risk, and feasibly sign contracts on a large scale. Wet signatures still have their place in high-value, high-negotiation deals, but they are a waste of time for standard and low-value contracts.
The difference between wet, electronic, and digitally native signatures
Many people use the terms electronic and digital signature interchangeably, but they’re not the same. Before knowing which contract management solution is best for your business, you should understand the difference between these three types of signatures:
- Wet signature: A person physically marks a document with wet ink, usually by writing a name in a cursive format.
- Traditional electronic signature: A person acknowledges or adopts an electronic message, transaction, or document. Examples include typing your name at the end of a document, a handwritten but digitally captured signature on a touchscreen device, or clicking “I agree” or “I disagree” on an electronic statement of terms and agreements.
- Digitally native signature: A digitally native signature is a type of e-signature, but rather than “scribbling” your name on a pdf or signing a separate signature envelope, it allows you to accept an agreement with the click of a button. When your business uses clickwrap or click to accept signatures, you collect data that ties the person who accepted the contract to that specific version of the agreement.
Both e-signatures and digitally native signatures are secure and provide a quick contract process, but digitally native signatures have one important edge — they provide a frictionless signing experience. Businesses operating online can’t afford to slow down their process, and agreements that go through with the click of a button are more and more becoming the expectation.
Other types of electronic signatures are valid and enforceable in most countries and can replace wet signatures sufficiently.
When do I need a wet signature?
In the U.S. and many other countries worldwide, electronic signatures can carry the same legal effect as wet signatures. Important legislation that covers electronic signatures are:
- The Electronic Signatures in Global and National Commerce Act (ESIGN) – U.S.
- Uniform Electronic Transactions Act (UETA) – U.S.
- Electronic Identification and Trust Services Regulation (eIDAS) – European Union
- Personal Information Protection and Electronic Documents Act – Canada
- Electronic Transactions Act – Australia
- Electronic Communications Act – U.K.
Under these laws, and similar ones around the world, electronic signatures are enforceable.
Some jurisdictions still require wet signatures for certain transactions, however. In the U.S. and Canada, for example, notarized documents must be signed in wet ink. In family law, banking, and for wills and trusts in the U.S., wet ink is typically a requirement as well. Any documents that British residents file with the U.K. tax authorities require a wet signature as well.
However, for most business contracts, you can safely assume that an electronic signature is acceptable and legally valid. If you’re ever unsure, you should check with your counterparty before signing.
Why are digitally native signatures better than electronic signatures?
The biggest benefits of digitally native signatures for your business are:
- Time savings: You save time during the review and approval stages in the contract management process, as they can be signed in a matter of minutes or hours, rather than weeks.
- Less risk: The risk of digitally native signatures is more manageable if you use a dedicated digital contracting platform that stores all your signatures in a searchable, centralized database.
- Better for large scale: Digitally native signatures are better for low-value, high-volume contracts, allowing Legal to create standard terms that can be plugged into the contract depending on who is signing. It eliminates an extensive approval process.
- Frictionless experience: Digitally native signatures streamline a purchase experience for buyers, for example, reducing the chance that they’ll abandon their purchase. They also keep everything secure.
Clickwrap: A better type of electronic signature
Clickwrap is a digitally native electronic signature. You accept a clickwrap agreement by clicking a button or checking a box that says “I agree.” Unlike traditional electronic signatures where you type your name or attempt to draw a line resembling your name with your mouse or finger, clickwrap agreements leave a digital trail behind. The key data points collected behind the scenes of a clickwrap agreement confirm which user actively assented to s specific agreement.
Clickwrap agreements are often used in B2C settings, where customers make purchases or sign up for accounts online. They’re also common for the installation of many software packages or registering for social media services like Facebook, Twitter, or LinkedIn.
Wet signatures vs. clickwrap
Clickwrap agreements are common on the internet. When they’re designed, presented, and tracked correctly, they’re just as enforceable as wet signatures and electronic signatures in the U.S. Today, contract and approval processes move quickly, so your signing experience should accommodate for that speed. Imagine how quickly you can get a signature and how much easier it is to store it when you use a digitally native e-signature. Wet signatures can still be helpful when closing big deals, but they’re impractical when you have a high volume of agreements that need a fast approval.
To enforce clickwrap agreements and provide the best experience, businesses must ensure the screen they appear on is optimally designed so that the user explicitly accepts the contract and has actual or inquiry notice of the terms. These requirements are typically fulfilled by providing a button to click or box to check, indicating the intent to sign, and making the text of the terms and conditions available to read before clicking the button or checking the box. (Learn more in our Clickwrap Litigation Trends report.)
The benefits of clickwrap
Clickwrap agreements have several advantages that make them one of the most widely used forms of electronic signatures on the web. Clickwrap allows you to:
- Scale up your agreement process fast by applying clickwrap to several types of agreements
- Enable collaboration across teams with no bottlenecks in the process
- Present enforceable agreements
- Add a contract to any online workflow, including as an embed on your website, as its own URL, or delivered by text and instant messages
- Give Legal more time to work on other more innovative, strategic initiatives
- Create secure contracts that demand a higher level of security, providing a digital audit trail and storing all signatures in a centralized platform
Do we still need wet signatures?
Electronic signatures have replaced traditional wet ink signatures in most business transactions. Switching to clickwrap or other digitally native electronic signatures can provide your business with a competitive advantage in your market.
However, when you use electronic signatures, it is essential to make sure you choose a system that makes contract management easier. Ironclad’s platform makes digital contracting less of a hassle and more secure. We prevent tampering with your contracts and signatures so you can focus on running your business.
- The difference between wet, electronic, and digitally native signatures
- When do I need a wet signature?
- Clickwrap: A better type of electronic signature
- Do we still need wet signatures?
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Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.