Is a scanned Contract legally binding in Australia?

Is a scanned Contract legally binding in Australia?

Is a scanned Contract legally binding in Australia?

The short answer is YES, it can be. But first let’s cover off some other frequently asked questions surrounding contracts.

Do different countries have different preferences for scanned contracts?

In a recent LinkedIn group discussion with other lawyers around the world, different countries appeared to have different preferences regarding hard copies versus scanned/electronic copies of contracts.

Those countries happy with a Scanned or Electronic copy of a contract were:

  • Australia
  • France
  • India
  • Netherlands
  • Philippines
  • UK
  • USA

Those countries who preferred a hard copy signed contract were:

  • Chile
  • Indonesia
  • Nigeria
  • Mexico
  • Pakistan
  • Singapore

So, depending on where you are in the world, a scanned copy of a contract might not be your best form of contract.

Does a Contract Have to Be In Writing?

No.

Most of the time a contract doesn’t have to be in writing, as much as anyone might tell you otherwise. This includes those people who decide they can’t afford to pay for your services and say ‘I never signed the contract‘.

We’ve covered this question in more detail in another article about contracts.

Do you need a lawyer to write a valid Contract?

No.

Some people are very capable of identifying the core issues in a deal and documenting that clearly. Lawyers are trained to do this, but that doesn’t mean they are the only people capable, and in fact, we’ve seen some poor contracts written by lawyers as well.

Most contracts only need to contain three components to be legally valid:

  1. All parties must be in agreement (after an offer has been made by one party and accepted by the other).
  2. Something of value must be exchanged (such as money, services, goods or a promise to exchange such an item) for something else of value.
  3. All parties intend to create a legal relationship (rather than a joke or a bet in the pub).

It is legally valid to simply keep a written record of what has been agreed, preferably dated, keeping the following in mind:

  • There is less chance of arguments in the future if everyone involved checks that the words correctly state their agreement.
  • Getting a signature on a page can be used to demonstrate that the person signing agreed to what has been written down.
  • When writing your own agreements keep the words as straight forward as possible and avoid leaving blanks that could be filled in by other people at a later date.
  • Never sign a contract unless you completely understand what you are getting into (even lawyers can make this mistake).
  • Write down your initials next to any changes that are made to the contract.
  • Everyone involved should get a copy of the final contract, whether or not it is signed.
  • Get legal advice if you are not sure whether the contract properly reflects your agreement, or if you have any concerns about the agreement.
  • Don’t assume something is okay if you don’t understand what it means. It is better to be clear than confused and have problems later.

CAUTION

We have seen contracts written by people who do not have legal training. Sometimes they are good, sometimes they are bad.

Some consultants get hold of precedents and think they know how to amend them. This can create legal problems, rather than solutions.

We have seen a contract cobbled together by a marketing or business consultant that was overly complicated, contradictory and contained terms that simply weren’t relevant to the purpose of the contract.

Beware if the language is old fashioned with lots of Latin references or ‘heretofores‘ etc, then it’s probably an old document someone has copied and may contain references to law that has changed over the years.

 

Does a Contract have to be Signed to be binding?

No.

Some contracts – for instance where someone guarantees the repayment of another’s obligation – have legislation that requires signatures to prove that the contract is valid, but most common contracts can be completed without an original signature, particularly after the adoption of Electronic Transaction Legislation which provides for the enforcement of click wrap agreements and electronically signed agreements.

How can you tell if a person agrees when they haven’t Signed a Contract?

A party must be seen to agree to the terms of a contract in order for it to become legally binding.

You can be seen to agree to the terms of a contract even if you haven’t read it. Click wrap agreements – those links to terms and conditions with an ‘I agree’ check box online – are a prime example of contracts that people enter into every day without reading them. How many of you have read all of the terms and conditions applicable to your Facebook account? Not many for sure.

If you take an action that has been anticipated in the contract, even if you haven’t signed it, you may be seen to have acted consistently with the contract, and in compliance with it.

Though agreement can be demonstrated by the signatures of the parties, it is generally accepted that parties can enter into a contract by following the course of action set out in the agreement, which ‘proves’ their consent.

When drafting a service agreement for a business we will usually include a paragraph that makes the services terms binding, whether or not the agreement is signed by the client. This is because it is often difficult for businesses to get clients to return signed documents before starting work.

An example of the type of clause used might be:

This agreement will be binding on you as soon as you ask us to start work, unless you immediately ask us to stop providing Services to you, whether or not you sign it.

For contracts that do need a signature (like guarantees) it is highly unlikely that the contract will be found to be binding on a party if it is not signed.

Contract formalities

As a general rule contracts do not need to comply with any sort of formalities. Even if you have a written document that has been signed, a signature can be challenged with evidence from a handwriting expert, and we have been involved in a court case where this was done.

Court matters – litigation – are costly processes and one of the most costly phases of litigation is the called ‘discovery‘. During the discovery process, each party to a court matter is required to create a list of all documents that might have anything to do with the dispute, and prepare those documents in a format that the other parties can read.

Thirty years ago all the documents presented to court tended to be in paper form. Now, they are mainly electronic. Think of all those short ‘thanks‘ emails you have sent in the last year. If created as part of a conversation that is now related to a dispute, they are each separately discoverable in court proceedings. 

With the proliferation of email and other electronic messaging, electronic discovery has become almost essential to court proceedings. Electronic discovery is now an industry in its own right with analytics and processing to avoid human beings having to read every electronic document ever produced.

So, coming back to scanned copies of contracts and whether or not they are enforceable. The real question is –

Is the scanned copy of the document the best available evidence that the parties entered into a contract in the first place?

While having an original printed contract with hand written signatures available to prove the parties were involved would arguably provide the best evidence, it’s not the only method to prove that a legally binding agreement can be formed, and proven, between parties. If a paper copy is not available, the scanned copy probably is the best evidence.

How can Onyx Legal help you?

If your contracts need review, update, or you don’t have one yet, let us help you to create the best contract for your style of business to avoid unnecessary delays. We love writing contracts. Contact us so we can help you with your contract today.

GDPR and the impact of a ‘no deal’ Brexit

GDPR and the impact of a ‘no deal’ Brexit

GDPR and the impact of a ‘no deal’ Brexit

The UK is scheduled to exit from the EU on 29 March 2019

There are substantial negotiations underway for transitioning of legal, trade and other relations between the UK and the EU after Brexit happens. At this stage, many of the negotiations have been unsuccessful either within the UK’s own parliamentary system or between the UK and the EU. Without agreements for transitioning and new agreements for interacting with the EU, the UK faces numerous disruptions to trade, security, medicine availability, travel, workplace regulations and citizenship of UK citizens in other parts of the EU.

There are a few options between now and 29 March 2019.

The first is that a deal will be put together for transitioning. This would be the most favourable outcome for continuity of business transactions and commerce. The second is, if no deal can be agreed upon, the date of Brexit may be extended by agreement to allow more time for negotiations. The third scenario is what is being called a ‘no deal Brexit’.

What does a ‘no deal Brexit’ mean?

If no agreement for transitioning can be reached and the exit date is not extended, the UK exit from the EU will happen on 29 March 2019 and there will be a degree of chaos attached.

For the many laws and rules currently intertwining the UK within the EU, there will be no deals in place for transitioning and planning. This will affect many laws and current practices, however for the purpose of this article, we are only looking at the management of data under the GDPR.

Why is a ‘no deal exit’ important for privacy legislation and who would this effect?

Under the GDPR (General Data Protection Regulations), the UK is currently part of the EU however from 29 March 2019 (or later date if this is extended), the UK will be an independent country.

If a no deal exit happens, the transfer of data between the EU and the UK will be restricted under the GDPR from 29 March 2019. It is possible that the UK will be granted adequacy status (yes, that is a technical term), but this cannot be assessed until after the exit has happened (and will likely take several months). In the meantime, the transfer of personal information from the EU into the UK must be completed using a standard contractual clause (‘SCC’) in the format approved by the EU.

Sounds complicated? Let’s break it down and look at the implications: 

Location of business receiving personal data Scenarios and action required prior to 29 March 2019
Head office of business within the UK and collecting data from any person within the EU or monitoring the behaviour of any person within the EU

Examples:

  1. You operate any kind of online membership subscription service that has EU resident subscribers.
  2. You have an online retail store that is open for EU residents to make a purchase.
  3. You provide advisory services and have clients resident in the EU.
ACTION: Review your privacy policy, make sure SCC’s are in place with businesses within the EU that you deal with eg hosting, cloud storage.
If you process data of EU citizens and transfer this data to the US under the US privacy shield, you will need to look at your agreements with the US to ensure a SCC is added into each of these agreements as the US Privacy Shield will not work with the UK anymore.
Unless you have an office in the EU, you will need to appoint a privacy representative in the EU.
Head office of business within the EU (but not in the UK)Look carefully at where your data goes. There will no longer be a free flow of data from EU to UK. Do you transfer data to the UK? Data subjects will have to be told.

Head office of business outside of the UK and EU and collecting data from any person within the EU or monitoring the behaviour of any person within the EU

Not much changes here, you should already have in place a compliant GDPR privacy policy and SCC’s protecting the flow of data of EU citizens. A review of your privacy policy will be required if you rely on the US Privacy Shield for the transfer of data of UK citizens
Any business relying on the US Privacy Shield for the transfer of data in or out of the UKThere is a particular paragraph that needs to be added to the privacy policy of the US entity (yes, the wording is specific) to ensure that the privacy shield takes effect.

 

How can Onyx Legal help you?

We can help you work out if you have to comply with GDPR and prepare approriate privacy and cookie policies to comply with GDPR requirements. Contact us to find out more.