Why is it so important to know where you are signing?

“A man’s kiss is his signature – know whom you use it on!”

Conventional wisdom says to be careful what you sign. Of course this is true, but we seldom seem to follow it. We often sign on contracts, survey forms, letters, etc., without reading more than the subject line, forget what’s printed in minisculic fonts. This habit of signing without proper reading and understanding can lead to disastrous outcomes.

These facts and instances will convince you as to why your signature is so important – be careful with you trust it with:

  • Have you heard of “signature liability”? There are lakhs of cases filed in courts across the country due to this. Consider this situation – your friend is taking a loan for the first time. He needs someone to testify him and to act as a ‘guarantor’, or to ‘co-sign a loan’. He comes to you for help, briefly explains it to you, and there you go – without reading, you sign it. Signing on such a document is absolutely lethal – it means that if your friend does not pay the loan, you have to pay it entirely by yourself – the liability becomes yours. Your friend had just asked you to testify him, and there you are, clearing his dues, for no fault of yours but one – you didn’t read the document before signing!
  • Contracts’ (any agreements where 2 people sign) are legally binding. The people involved in the transaction need to sign for any agreement to be valid and binding. Once a contract is in force it generally cannot be altered unless all parties agree. And, contracts cannot easily be broken. There are several instances where people are made to sign contracts without even knowing that it is a contract, forget what it contains. There have been several instances where a gym may offer you a free class, ask you to sign on some paper which they say states that you have taken a free class, but actually, is a contract for one year membership – once you sign without reading – you have no option but to pay for it and forcefully take the membership – all because you didn’t read it.
  • When we finally get that job we were praying for, we often forget to even read the employment acceptance contract and straight away sign it – beware, you are making a costly mistake in excitement of the job! It is of utmost importance to read the job title and description – whether it matches what has been verbally communicated to you, make sure the salary and bonus conditions are the same as has been negotiated with you, and among others, carefully read and understand the ‘cause of termination’ clause. The reasons the employer can give if they want to terminate the contract are reflected in terms of termination. Don’t hesitate to ask the HR department for clarification if you don’t understand the legal jargon. The terms of termination need to be clear. Otherwise, you might end up agreeing to your termination at any time, without notice and worse, without any reason. This is termed ‘without cause’.
  • Never, never, never ever sign a blank cheque. Let’s assume you have Rs. 10,000 in your bank account. You sign a cheque and give it to someone you trust without filling in any details. That person can write any amount on it, even exceeding your bank balance, deposit it in his name, the cheque will bounce because you have insufficient balance – and then he can file a ‘criminal case’ against you for cheque bouncing in the court of law – all because you didn’t write details on a cheque before signing it. If you don’t know the exact amount but need to give the cheque, then you can mention on the cheque ‘Not Above Rs. Xxxx’, so that, you are atleast capping the maximum amount that can me mentioned in the cheque. Also, always mention ‘account payee’ on it, so that it goes only to the intended person, and write the person’s name on the cheque before signing it. Under no circumstances should you keep blank cheques signed.
  • As we move towards a digital world, our signature too, is becoming digital. A physical signature can be replaced virtually by the ‘I Agree’ button on various emails and websites. You click “I agree” to a website’s privacy policy, obviously without reading it, and later realize you’ve given permission to the website to share your personal information. How else do you think a pop-up appears on Google which has an item you were looking online for!?

A good habit is to always take a photocopy of every document and agreement you sign, after reading and signing, so as to have proof as to what you have agreed upon and signed, and to ensure that no one takes you for a ride. So, next time before you pick up the pen to sign, keep in mind that 1 minute of prevention (by reading) is a thousand times better than several hours and Rupees of damage later!

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