Which statement is true about the implications of a signature on a contract?

A signature on a contract signifies formal agreement and an intention to be bound by the terms outlined in that contract. This fundamental principle is central to contract law, where the act of signing reflects the individual's consent to the terms and conditions specified. When a party signs a contract, they are essentially providing legal acknowledgment that they understand and accept the obligations and rights established within the agreement.

This understanding is critical because it underscores the enforceability of the contract. Courts rely on the signature as proof of the parties' intent and agreement. In legal disputes, a signature can serve as a vital piece of evidence demonstrating that both parties entered into the agreement willingly and with the intent to honor its provisions.

In contrast, other options reflect misunderstandings of contract law. Disregarding a signature simply because a signatory changes their mind does not align with legal principles governing agreements. The idea that a signature is merely a formality fails to recognize its importance in asserting intention and commitment, and suggesting that it merely signifies the existence of the document overlooks the active role a signature plays in signifying agreement. Thus, the correct understanding is that a signature conveys a formal and binding agreement to the terms set forth in the contract.