28 Sep Covid-19: Electronic and remote signing of documents and Deeds – what you need to know.
Temporary laws addressing issues relating to the signing and witnessing of documents have been passed in almost all Australia jurisdictions. So can we all sigh a big relief and know that life and business should be easier? No, not quite.
Execution by Companies:
For companies, the starting point is the Corporations Act 2001 (Cth) (Corporations Act). It provides a number of ways that documents can be executed by a company. The most commonly used provision is section 127 which allows for documents to be validly executed by a corporate entity (with or without a seal):
1.where there are two or more individuals appointed as officers, then:
a. two directors of the company sign, or
b. a director and a company secretary of the company sign, or
2. where a proprietary company has a sole director, who is also the sole secretary, that sole director/ sole secretary signs. If a proprietary company has a sole director that person must also be appointed as the company secretary as well.
If a document is validly executed using section 127, the other party can rely on certain assumptions contained within sections 128 and 129 in respect of “dealings with” that company that are designed to prevent the company from escaping liability by arguing that certain formalities were not complied with.
Although section 127 has included less traditional methods of execution, the Corporations (Coronavirus Economic Response) Determination (No.1) 2020 (Cth) (the Determination) provides a legislative framework to better enable businesses to function by expanding section 127 to cover:
- company officers using electronic signatures such as pasting a copy of a signature into a document, signing a PDF on a tablet or other mobile device;
- executing a document in electronic form;
- executing counterparts or copies of a contract in physical form meaning split execution;
- using electronic communication which reliably identifies the person and indicates the person’s intentions about the contents of a document (this must be the entire document but need not include signatures of other parties).
That all seems sensible, so why can’t we sigh a big relief? Well because not everyone is singing from the same hymn sheet. In New South Wales (NSW), Victoria and Queensland, the States have developed their own legislation which permits the making of deeds in electronic form, and extends to both companies and individuals alike.
Execution by Individuals:
Although the other States and Territories have their own temporary, Covid-19 legislation, there is some question over the Determinations application to execution where the requirements for paper, parchment and vallum exist.
Characteristics of a signature and why electronic execution can be troublesome:
As mentioned earlier, the common law accepts that execution of documents can occur through other, non-traditional, methods. But for the signature to be legally enforceable, the signature must:
1. evidence the signatory’s identity; and
2. evidence the signatory’s intention to be legally bound by the signature; and
3. authenticate the document by the signature marking it as final as compared to draft.
What documents can be executed electronically?
For NSW, the Determination sets out clear rules for the making and execution of deeds and agreements, including the use of audio visual link. The documents to which the Determination applies includes:
- Wills
- affidavits (including annexures and exhibits)
- powers of attorney
- enduring guardianships and
- Statutory Declarations.
What if my Deed is not capable of being executed electronically?
Although this is unlikely with the temporary legislation in force, if a Deed was incapable of being executed electronically, alternatives may include:
- executing the Deed electronically with the agreement to sign the Deed with wet ink at a later date;
- using an Agreement instead of a Deed if the formalities are satisfied for an Agreement (in particular the need for consideration although an exchange of promises could be sufficient consideration); or
- signing the Deed pursuant to some other authority, for example under a Power of Attorney (if appropriate).
How to minimise fraud risk:
Firstly, by using a secure platform, such as Docusign, which is able to satisfy the key characteristics of a signature through the use of identification, reliability and consent by signatories. It is advisable to avoid pasting signatures onto documents or using computer styluses as they can attract a higher risk of identity fraud.
Secondly, ensure that any lawyers involved in the process:
1. send the Deed or agreement to personal email addresses of the intended recipients;
2. send the full and complete Deed or Agreement and not just the execution page;
3. refrain from dating the documents until received back by the issuing lawyer;
4. include an execution clause where the parties consent to execution by electronic means and intend to be bound by their electronic signatures;
5. request written confirmation that the Deed or Agreement has been duly executed;
6. send all signed Deeds or Agreements to the other party’s lawyer
Using a secure platform such as Docusign does not increase the risk of fraud above the usual risk level using wet ink. If a situation is considered to be high risk, it would be prudent to conduct additional identity checks and confirm the signatory’s intention to be bound by the Deed or Agreement first.
Do you have questions relating to the signing of contracts during COVID-19? Contact our Commercial Law Team at Solari and Stock Miranda on 8525 2700 or click here to request an appointment via our online portal.