Introduction

Signing a contract is a big moment in any business deal—it’s when both sides shake hands (figuratively or literally) and lock in the terms for real. But how exactly do you sign a business contract, and what are your options? With all the tech advancements and new legal rules, there are now more ways than ever to get that signature down.

In this article, we’ll explore the most popular methods, their perks, and when each one might be the best fit for your business.

Read: What does executing a contract mean?

Traditional wet signature

The most old-school way to sign a contract is with a wet signature—basically, putting pen to paper and scribbling your name the old-fashioned way. Wet signatures have been the go-to method for centuries, and they’re still going strong, especially for documents that need that personal touch or when the law insists you break out the pen.

Pros of wet signatures

• Widely accepted: Wet signatures are universally recognized and accepted in nearly every legal system.

• Security and authenticity: Signing in person provides a level of security and certainty, reducing the risk of forgery or disputes over whether the person actually signed the document.

• Suitable for high-value contracts: For high-stakes deals, having a physical, signed document can provide peace of mind to both parties.

Cons of wet signatures

• Time-consuming: Requires both parties to be physically present or for documents to be sent back and forth, which can delay the process.

• Storage issues: Physical documents require secure storage space and can be more challenging to organize and retrieve.

Read: Do legal documents have to be written in English?

Electronic signatures

Electronic signatures (e-signatures) are having a moment, thanks to the boom in remote work and digital transactions. An e-signature is like a digital stand-in for your handwritten signature, and it comes in all shapes and sizes—from typing your name in a box, clicking a “Sign Here” button in an email, to doodling your name with a stylus or finger on a touchscreen.

Pros of electronic signatures

• Convenience and speed: E-signatures allow contracts to be signed quickly, without needing both parties to be in the same place. This is especially helpful for businesses with remote teams or international clients.

• Cost-effective: E-signatures reduce the costs associated with printing, mailing, and storing physical documents.

• Legally recognized: E-signatures are legally binding in many jurisdictions, including the U.S., UK, and the EU, thanks to laws like the ESIGN Act and eIDAS Regulation.

Cons of electronic signatures:

• Potential security risks: While secure, e-signatures can still be vulnerable to cyber threats if not protected by strong encryption and authentication methods.

• Not always accepted: Some countries or specific types of documents may still require a wet signature, so it’s important to check the local laws and regulations.

Digital signatures

Digital signatures are a more secure version of e-signatures that use encryption to confirm who signed and make sure the document hasn’t been altered. They’re often used for sensitive or high-stakes contracts where keeping things locked down is a priority.

Pros of digital signatures:

• Enhanced security: Digital signatures use encryption to protect against tampering, ensuring that the document has not been altered after signing.

• Identity verification: Digital signatures often include verification steps, such as a digital certificate or two-factor authentication, making it harder for unauthorized users to sign.

• Audit trail: Digital signatures provide a digital audit trail that records who signed the document, when, and where, adding another layer of security and accountability.

Cons of digital signatures:

• Initial setup: Digital signatures require a digital signature platform and may involve some upfront costs for software or digital certificates.

• Learning curve: Digital signatures can be slightly more complex to set up and use compared to basic e-signatures.

Read: 7 common contract mistakes that could cost your business thousands

A hybrid approach

A hybrid approach is like a signature buffet—you get a bit of everything. Depending on the situation, a business might use wet signatures for super-sensitive deals, e-signatures for the usual day-to-day stuff, and digital signatures when they want that extra layer of security.

Pros of hybrid signatures

• Flexibility: Hybrid signatures allow businesses to choose the most appropriate signing method based on the nature of the contract and the parties involved.

• Tailored approach: Hybrid signatures provide a customized signing process that balances convenience, security, and compliance.

Cons of hybrid signatures

• Increased complexity: Managing multiple types of signatures can complicate the process, especially if different people or departments aren't sure which method to use when.

• Higher costs: Using a mix of wet, electronic, and digital signatures may require investing in both digital tools and physical storage solutions, potentially raising overall costs.

• Inconsistent procedures: Switching between different signature methods might lead to inconsistencies and confusion, especially in terms of security measures, compliance, and documentation practices.

• Time-consuming: Coordinating multiple types of signatures for different contracts can slow down the process, particularly if documents need to be signed in different ways by multiple parties.

Read: The importance of having a dispute escalation process in your contracts

How Cobrief can help with contract review

Reading your business contracts can feel overwhelming as an owner-manager of a small to medium-sized business. That’s where Cobrief comes in. Cobrief helps business owners and operators review their business-to-business contracts for legal risks.

Upload your contract to Cobrief's AI contract review software, click review and you’ll get a list of all the risks, in plain English. This helps you decide whether to sign, negotiate or reject the terms of your contract, or hire a lawyer. Think of it as a heat map for your contracts.

Get started here.