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Witnessing a Signature: What You Need to Know

Witnessing a Signature: What You Need to Know

by | Feb 10, 2021 | Contracts, Law for Online Business, Legal, Service Agreements

Witnessing a Signature: What You Need to Know

WITNESSING A SIGNATURE: WHAT YOU NEED TO KNOW

Getting a document signed is all about proof. It is a lot easier to show that someone has agreed to a contract if you can show that they applied their signature to that document, and a witness helps to identify the person signing.

Most legal documents do not have to be witnessed. A commercial agreement between businesses does not need to be witnessed to be binding.

For documents that do need a witness, different rules apply as to what type of witness is required, and how they are to do the witnessing. By watching you place your signature on the document and signing their own name next to yours, witnesses help verify the authenticity of your signature and help prove that it was signed willingly.

Signing a document is also called ‘executing’ a document and often you will see that the signing page is called the ‘execution page’. In this usage, ‘execution’ is used in a manner similar to ‘performance’ or ‘giving effect to’ an agreement.

Before we start, it is important for you to first understand the difference between a company and an individual when it comes to signing documents.

 

COMPANIES VS INDIVIDUALS

In most cases, when a company executes a document, no witnesses are required.

Under s.127 of the Corporations Act 2001, a company without common seal can execute a document by having it signed by 2 directors, or a director and company secretary, or the sole director and secretary of a proprietary company. Their signatures do not need to be witnessed.

For a company with common seal, the fixing of the seal must be witnessed by 2 directors, or a director and company secretary, or the sole director and company secretary of a proprietary company. An independent witness is not required.

Most companies no longer use a common seal.

Be aware also, that even if the document is not signed in accordance with s.127, the signature may still be binding; the parties simply can’t rely upon the provisions of s.127. It does not invalidate the signature.

This is not the case for individuals.

Depending on the type of document, the law sets out different requirements for an individual’s signature to be witnessed. Not all documents require witnessing. Examples of documents that do need witnessing include affidavits, statutory declarations, deeds, Wills and powers of attorney.

Who can be a witness also depends on the type of document. Sometimes it can be any independent party, and sometimes it must be an ‘eligible witness’ who hold specific qualifications.

We will discuss these different requirements below, using Queensland legislation as an example.

Regardless of whether signed by a company or an individual, when a document is signed, whether read or not, or understood or not, the signing party is bound. This principal was reiterated by the Australian High Court in the case of Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52, after reviewing prior case dating back to the 1800s. The Court held that:

“Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief.”

agreements

You are not legally required to have your signature witnessed on an agreement. However, the agreement itself may contain a clause to require the parties to have their signatures witnessed. This may be beneficial for evidentiary purposes and to avoid dispute later. For example, if one party alleges that they were not the ones who signed the agreement, the witness of their signatures can confirm that they were.

The witness can be any independent party and does not need to hold specific qualifications. A spouse, family member or close friend is unlikely to be considered independent.

 

deeds

Unlike an agreement, you are legally required to have your signature witnessed if you are signing a deed. You will be able to tell if a document is a deed, because the signing page is likely to be titled ‘Executed as a Deed’.

In Queensland, the Property Law Act 1974 (Qld) sets out the witnessing requirements for a deed. Other Australian states and territories have similar legislation so that execution of deeds in Australia is covered by uniform requirements.

At least one independent party must witness your signature. It is not a requirement that the witness holds specific qualifications. It is a requirement that they are independent.

If your deed is not properly witnessed, it may not be enforceable.

There are flexible signing provisions in place during COVID restrictions, but they all have time limits.

 

wills and powers of attorney (poa)

The Succession Act 1981 (Qld) governs the signing of Wills.

When the maker of the Will (male – testator/ female – testatrix) signs the Will, two witnesses must be present at the same time to witness their signature. The witnesses can be any independent parties, that is they can not be a beneficiary under the Will. Usually, everyone will use the same pen to sign the Will.

When a Will does not meet the witnessing requirements, it will be invalidly made. You may still apply to the Court to have it declared a valid Will, but it is easier to have the Will properly witnessed the first time, rather than having to go to court to prove it.  

The Power of Attorney Act 1998 (Qld) requires an enduring power of attorney to be signed in the presence of an eligible witness.

An ‘eligible witness’ means a person who is:

  • a justice of the peace
  • a commissioner for declarations
  • an Australian lawyer
  • a notary public.

 

land registry documents

If you need your signature to be witnessed on a document that is to be registered with the Queensland Land Registry, the witness must be either:

  • a justice of the peace
  • a commissioner for declarations
  • an Australian lawyer
  • a notary public
  • a licensed conveyancer from another state
  • another person approved by the Registrar of Titles.

The Land Title Act 1994 (Qld) and Land Act 1994 (Qld) requires that a witness comply with the following requirements:

  1. take reasonable steps to verify the identity of the signatory;
  2. take reasonable steps to ensure the individual is entitled to sign the document; and
  3. retain records for 7 years (which includes a written record of the steps taken to verify identity and entitlement, and documents or other evidence obtained during the process of verification).

What this means for you as the signatory is that:

  1. you will have to produce evidence that verifies your identity; and
  2. passport, driver’s license
  3. you will have to produce evidence that you are the person entitled to sign the document.
  4. if you are selling a property, a current rate or valuation notice addressed to you and identifying the property, or a current title search
  5. if you are signing under a POA, you must produce the registered POA

covid-19 legislation

There is temporary COVID-19 legislation around the country which has changed some of the witnessing requirements mentioned above by offering greater flexibility.

For example, in Queensland, deeds can now be signed electronically without a witness. Wills and powers of attorney can be witnessed through audio or visual link.

The Queensland COVID-19 legislation will expire on 30 April 2021.

Want more information?

If you need help with agreements, deeds, Wills and powers of attorney documents and worry about what witnessing requirements apply, please contact us. 

Make an Appointment

Deeds vs Agreements: What’s the Difference?

Deeds vs Agreements: What’s the Difference?

by | Feb 10, 2021 | Contracts, Law for Online Business, Legal, Service Agreements

Deeds vs Agreements: What’s the Difference?

deeds vs agreements: what’s the difference?
 

Contracts are an essential part of running a business, and they often come in different forms. You may have noticed that some documents are called ‘agreements’, and some are instead called ‘deeds’. So, what exactly is the difference between the two?

Although both are legally binding documents that indicate a party’s promise to do something, the requirements and effect of these documents are very different.

It is important for you to understand these differences and use the most appropriate one for your commercial transactions. We will highlight some of the key differences below to help you avoid being confused between the two.

 

what is a deed?

A deed is a special type of binding promise or commitment to do something. It indicates the executing parties’ intention to make a solemn and binding promise. 

People often use a deed when substantial interests are at stake, such as when a person passes an interest, right or property. Deeds are also used when a unilateral promise is being made and there is no consideration from another party for that promise. For example, a unilateral confidentiality deed.

Common types of deeds:

  • Confidentiality Deed/ Non-Disclosure Deed

This is when you want to ensure that another party (for example, a consultant) does not share your confidential information. Typically, no consideration is provided under this type of arrangement because the consultant is not giving you anything in exchange for your  disclosure of confidential information.

  • Deed of Termination

This is a document signed by the parties to confirm that a legally binding contract previously entered into is to be brought to an end.

  • Deed of Release and Settlement

This is often used in legal proceedings to formalise an agreement between the parties to settle the dispute. Formal legal proceedings need not have been started. A deed of release is often used by parties wanting to avoid a court action starting.

  • Deed of Indemnity

This is used by one party to protect and hold harmless another party as a result of a specific type of relationship, or for a specific purpose. For example, companies provide an indemnity to their directors against liabilities or legal costs incurred in the directors’ capacity as a director of the company, with some limitations.

  • Letter of Credit / Guarantee

For example, when you purchase a property through a company or trust, the seller may require you to provide them with a personal financial guarantee to secure the obligations of the buyer.

Another example is where you are asked to provide a bank guarantee to secure the landlord’s rights to recover payment of rent. Your bank may then provide a bank guarantee or letter of credit to the seller on your behalf. There is no consideration between your bank and the seller for this guarantee. So, to ensure that it is binding, the guarantee is set out in the form of a deed.

What is an agreement?

An agreement is another name for a contract. 

It is formed when the following elements are met:

  1. offer;
  2. acceptance;
  3. consideration; and
  4. intention to be legally bound.

If you are selling goods or services in exchange for money, then what you need would be an ‘agreement’ instead of a deed because consideration is provided.

If you are providing those goods or services to the other party and does not ask for anything in return, then you should draft the arrangement as a ‘deed’.

So, what are the key differences between a deed and an agreement?

 

  1. Consideration

The most distinct difference between a deed and an agreement is the commercial exchange between the parties.

Under an agreement, one party must provide ‘consideration’ to the other party to show that they have reached a bargain, and that they have ‘bought’ the promise by providing something of value in return. This is usually in the form of payment but can also be in the form of starting an action, such as starting a design, or construction, or delivery of goods.

However, a deed requires no such payment or consideration to be legally binding.

 

  1. Formalities

Another significant difference between the two types of documents is the formalities required.

A deed must be:

  • in writing
  • signed
  • expressed to be a deed
  • delivered to the other party
  • where an individual (not a company or trust) executes a deed: witnessed by at least one person who is not a party to the deed

However, an agreement can be more flexible in form and does not need to meet the above requirements to be legally binding. An agreement can also be made up of multiple documents. Please see our article [link] on what you need to know about legally binding contracts.

In determining whether a document is a deed or agreement, the Queensland Court of Appeal has found that by using the words ‘executed as a deed’ or ‘by executing this deed’ unequivocally expresses an intention that the document was a deed rather than an agreement.

Another factor is whether or not the signing parties intended for the document to be immediately binding. If the answer is yes, the document is more likely to be construed as a deed.

 

  1. Execution (Signing)

Importantly, a deed is binding on a party when it has been signed, sealed and delivered to the other party. That is, even if the other party has not yet signed the deed.

On the other hand, an agreement must be signed by both parties before the agreement is formed, although with electronic signing, the actually application of a wet signature to a document may not be necessary, and an exchange of emails with a clearly identifiable and reliable signature on the email may be sufficient.

Different states have different legislation, so you need to ask about your local state requirements to make sure your deed is properly executed.

If you are an individual:

Under the Queensland legislation, you must have your signature witnessed by at least one person who is not a party to the deed.

If you are a company:

S.127 of the Corporations Act 2001 governs execution of documents by corporations. For example, a company without common seal can execute a document by having two directors or the sole director and secretary to sign it. This applies to both deeds and agreements.

 

  1. Limitation period

Both deeds and agreements are legally enforceable documents but be careful because they have different limitation periods.

‘Limitation period’ is the time frame you have available to enforce your deed or agreement against someone for breaching it. Each state has different limitation periods.

In Queensland, you must action a breach of an agreement within 6 years. In contrast, you have 12 years to action a breach of a deed.

This is the reason why it may be a good idea to draft non-disclosure deeds to protect your confidential information instead of non-disclosure agreements. For example, if your employee breaches a confidentiality agreement written into their employment agreement, you will be able to action against them for breach within 6 years, but if you have a separate confidentiality deed, you will be able to initiate a claim within 12 years instead.

With these core differences between a deed and an agreement in mind, you should be able to carefully consider your needs and figure out the most appropriate document to use for your business.

Want more information?

If you need help with drafting deeds or agreements or figuring out whether a deed or agreement is more appropriate for your use. Then make an appointment to talk to us.

Make an Appointment