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A) Introductory Remarks
The purpose or objective of preparing this Guideline / Pointer is to serve as a point of reference or guidance in relation to the formalities involved in the signing of formal agreements. This Guideline is merely to be treated as a material of reference and should not be regarded as all-encompassing, mandatory or binding in all situations pertaining to the formalities of signing Agreements as at all times it is incumbent that discretion, common sense and logical thinking prevail in each independent and individual situation.
B) The Salient Guideline / Pointers Discussed
1) The Essence of a Signature
A signature may be explained in essence as a unique and distinctive mark that identifies the person or individual who created it. It bears connotation to a person's name. It is customary for a signature to be characterized by loops, ascenders, descenders, lines, dashes, special characters or signs, as long as its consistency is maintained in all documents requiring signature.
2) The Incumbent Need for a Signature
The attachment of a signature signifies the legally binding effects of a contract or agreement requiring the signatures of all parties to it. Hence, the legally binding effect of a contract is subject to the signatures of each party involved being obtained. The effect of the signature acts as a confirmation of each party's agreement and desire of executing and fulfilling the terms in the contract.
3) The Appropriate Signatory Identified and The Manner of Reflection of This
Signatories are basically individuals who tender signature upon an agreement. A signatory must have attained the age of majority of 18 years and be involved in the execution of a document in order to sign their name.
A signatory may be in the form of a human being, corporation, Limited Liability Corporation or other entities such as non-profit organizations or government bodies. If a Company is a party to a contract, such as a Merger or Acquisition agreement, an individual whom has legal authority accorded by the Company would sign the document on the Company's behalf as an authorized signatory. A Company signatory can be specified through a directors' resolution, resolving that the Director or officer be authorized to sign documents for the Corporation.
The signature block should identify the name of the signatory and preferably the legal position or designation of the signatory and just below the line where the signature is to be attached / made, the words ‘Authorized Signatory' should be stated. This position is important in order to be able to establish whether or not the contracting party was duly represented at the time of entering into the Agreement which goes to the root or validity of such signature.
The wording identifying the signatories' respective legal position should be consistent with the requirements for representing the Company. Normally, the Articles of Association of the companies involved establish how the relevant Company can or must be represented. If the articles require that only the President or Chief Executive is authorized, the signature block should reflect this.
4) Appropriate Place to Attach / Tender Signature
The signing pages of most legal documents are usually to be found after all the terms and conditions of the Agreements are stipulated and these are usually towards the last pages. While each document varies, it generally contains a clearly demarcated and conspicuously apparent line with each signatory or Company name underneath, specifying where to sign. The signature is tendered in that place along with the name of the signatory and date. At times, the contact information of the signatory may also be furnished.
5) A Signature Block Accorded for Each Party
If a contract is entered into between several parties e.g. a loan facility agreement between financing parties on the one hand and various affiliated borrowing (or guaranteeing parties on the other hand, each such party should have a signatory line even where several entities are represented by one individual.
6) The Convenience of Having a Signature Schedule
If an Agreement is between many contracting parties, the execution of the Agreement may logistically be burdensome and it can be useful to provide for a separate signature schedule. Accordingly, the concluding clause should refer to the schedule in which the signature blocks are included and the signature schedule should identify the Agreement to which it relates (as well as a phrase ascertaining that execution of the schedule has the effect of executing the Agreement). This has the same effect as a deed of adherence by the execution of which a person adheres to an existing Agreement.
7) The Manner of Effecting Changes to a Legal Document
In effecting minor changes to a legal document, the term in question must be crossed out, altered and initialled by each party in order to become legally binding. Greater changes may require an amendment or separate document.
8) Witnesses to the Signing Identified
Witnesses may be stated to be neutral or unconcerned third parties who bear the responsibility of witnessing each signatory's signature. Usually, each party to the contract will have their own witness. 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.
9) Time of Signature
The date upon which you sign a legal document depends on your situation and needs. 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.
10) The Rationale for initialling on Every Page – Practical or Not?
The hypothesis behind the requirement that every page be individually initialled is the following: it prevents one of the parties from later inserting a false or modified page. So, the theory goes, it prevents fraud in the enforcement of contracts. This theory is strongly undercut by technology though. Contracts are no longer typed up by assistants – they are drafted with word processing software and an original file can easily be maintained for decades. The common Acrobat document format can "lock" the text of a contract in a saved version. Not only that, e-mail and fax transmissions of which the contract forms a part can further confirm the true text of a contract. All existing and transmitted versions of the contract would be admissible to authenticate the signed contract – not to mention the signed contract itself. Any person presenting an alternate version of a contract dissimilar to stored copies would face an insurmountable legal battle and in the worst case scenario, would likely perjure themselves.
Another far weaker theory is that if a party initials every page, he or she can't claim, "I was not aware of that provision." However, parties are bound to contracts regardless – lack of understanding or lack of diligence in reading the contract is not a legitimate defence in contract law.
Present World Scenario
The "every page" requirement is a hold out from a bygone era, before word processors, e-mail, document management and fax machines. There is no statute or law that demands that each page of a contract be initialled. Written contracts are binding if signed once by the parties to the contract – hence, one cannot simply wiggle out of a contract just because every page had not been initialled upon; the contract is binding if signed on the last page.
C) Points of Precaution When Signing Contracts – Documentary Improprieties
i) Signature Page Not In Order
An example of this would be a situation where part of the signature page is on one sheet of paper and part of it is on another sheet of paper to the effect that it appears to be ‘hanging' / disjointed / no continuous flow observed and there appears to be a ‘missing link' if one of the pages are extracted. An example would be a situation where signature is tendered at the bottom of one page and the name and designation are stated on another page.
Remarks: This is improper / a loose method of signing agreements without proper safeguards as there is potential for fraud if nothing is indicated on the top of the continuing page to evidence continuity. There could be potential for a situation of fraud to occur where the signing page could simply be extracted and inserted in another agreement. One cannot afford to be lax / cavalier about this sort of loophole as it forms the premise of a potentially risky scenario.
ii) Pages in the Agreement not Stipulated in a Manner to Evidence Tracking / Continuity / Part of a Complete Set
To cite an example, pages may be numbered to reflect individual numbering for example, Page 1 or Page 2 when it would be better to reflect part of a complete set such as 1 of 12 or 1 of 24 etc..
Remarks: In the interest of preventing fraud which may occur by the removal and substitution of certain pages, it would be best for the pages in the contract to be numbered in such a manner to reflect part of a complete set.
iii) Every Page Containing Clauses under the Contract to be Initialled Preferably by the Authorized Signatories to the Agreement
Remarks: Although this is not a requirement under the law, for the sake of good order to evidence the fact that the contents have been read and agreed to by all parties to the agreement, it would be best to adhere to the same.
iv) Proper Spacing between Paragraphs, Sentences Forming the Clauses
Remarks: In order to facilitate easy reading by all parties to the Agreement, it would be best that the signing version of the contract have proper spacing between paragraphs, sentences forming the Clauses.
v) Fair Copy of Agreement To Be Meticulously Vetted Through against Final Draft Prior to Signing by the Parties
Remarks: As an act of precaution in view of the legally binding impact upon the parties upon signing of an Agreement, it would be cautious / prudent to meticulously vet through the Fair Copy of an Agreement against a Final Draft prior to signing by the parties to the contract.
vi) Insisting That The Contracting Party Preparing The Fair Copy For Signature Ensure That The said Fair Copy of the Agreement Is In Order (compliance with the above-stated criteria and safeguards) Prior to the Parties Signing The Same
Remarks: This should be done / insisted prior to the signing session to ensure that all is in order beforehand. Proper checking of the fair copy must be done. It must be impressed upon the party preparing the Agreement that this would be in the interest of all contracting parties and that the salient principles governing the propriety of contracts entered into from a procedural standpoint must be complied with without any waiver / compromise. All legal personnel witnessing / present at the signing session should be knowledgeable and fully aware about this.
D) Declaration
The material which was researched in preparation of this written work had been sourced from the internet in the form of articles posted by solicitors, legal academicians etc.. Thus with the exception of Point C, all other written material has been obtained from internet sources and edited and modified for better clarity and understanding.
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