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What Does A Standard Signing Clause Look Like and What Does It Apply To?

What Does A Standard Signing Clause Look Like and What Does It Apply To?

by | Jun 9, 2021 | Contracts, Law for Online Business, Legal

What Does A Standard Signing Clause Look Like and What Does It Apply To?

What does a standard signing clause look like and what does it apply to?

Generally

A person will be bound by the terms of an agreement they sign whether or not they have read it, and whether or not they understand its terms. So, a signing clause can be very simple. The main purpose is to prove that a person has agreed to the contract they have signed.

In most cases in business, a person is entitled to reasonably rely upon the signature of the person signing as being authorised to bind the company they work for. This is not always the case. If you are dealing with a very junior person in a business, it is unlikely they have the required authority to sign something that binds the business, but the signature of a senior manager or director should be able to be relied upon.

For the purpose of proof, the best style of basic signing clause should include:

  • the name of the person signing, in a legible form, which is why signing clause sometimes say ‘print name’ or ‘block print name’;
  • a signature
  • the date.

The reason to include a date is to easily track when the agreement was made. It is very common for signing parties to forget to enter a date on the first page of an agreement (where there is usually a space for the date) and then years later, anyone trying to work out when the document should be dated is trawling through emails and other records to try and figure it out. At least if the person signing has to also date the document, if it is missed on the first page, there will still be an easy reference within the document.

If you’ve been following our recent articles, you would probably know that although not all documents need to be signed to be legally binding, it is always a good idea to use a signature to indicate that an agreement was entered into between the parties. The signature can be a reliable form of proof of agreement.

Different types of documents have different execution requirements. (Execution in this context means the performance of something in a planned way, not the killing by legal punishment meaning.) For example, deeds have different execution requirements than agreements, and we will discuss those differences below. Other documents such as wills, powers of attorney or court documents also have different rules around proper signing.

Having an appropriate signing clause can help ensure that your document is correctly executed and is valid and enforceable.

So, what does a standard signing clause look like? Let’s start by looking at signing clauses for agreements.

Standard signing clause – agreements

A standard signing clause applies to all kinds of agreements (but not deeds). For example, services agreements, licence agreements, contractor agreements, and loan agreements.

The elements of a signing clause would need to be slightly adjusted depending on who is signing.

1. Individual

If you are signing as an individual, nothing more is required than your name and signature.

Although not legally required, it is good practice to have your signature witnessed by a third party. This is good evidence in case a dispute arises as to whether the agreement was properly signed, and particularly if the person signing argues that they did not intend to sign it.

An example signing clause would look like this:

When a signature does not need to be witnessed to be legally binding, then even though there is a section for a witness, the document will still be binding without it.

If someone signs a document without a witness, it is too late for their signature to be witnessed. A person can only witness a signature if they are present and watching as the person signs the document. We sometimes have people ask us to witness their already signed documents, and the answer is always, ‘no, we will have to reprint the page and do it again’.

2. Company

If it is your company that is executing an agreement, you should comply with the Corporations Act 2001 (Act); in particular, section 127 of the Act.

The signing clause for companies usually contains the words ‘signed on behalf of [company name] in accordance with s 127 of the Corporations Act 2001 (Cth)’.

Signing pursuant to that provision means that a person can rely upon the Corporations Act to state that the document was properly signed, however, if a document is not signed correctly in accordance with that section, it may still be binding on the company.

             a) With common seal

If your company has a common seal (which is basically an ink stamp that you can press onto an agreement as the company’s signature), that stamping must be witnessed by:

  • 2 directors of the company;
  • 1 director and 1 company secretary; or
  • the sole director and secretary of a proprietary company.

The use of a common seal is becoming less common. Most companies execute without a common seal. Companies such as registered training organisations, that provide certificates of completion for students, are the types of companies that still adopt a common seal.

             b) Without common seal

Executing without a common seal is a very similar procedure, with the only difference being you do not have to stamp the agreement with a common seal.

It simply requires the signature of:

  • 2 directors of the company;
  • 1 director and 1 company secretary; or
  • the sole director and secretary of a proprietary company.

These signatures do not need to be witnessed.

3. Trust

A trust is not a legal entity on its own and cannot execute agreements. Trustees are the ones that sign on behalf of the trust.

A trustee can be an individual or a company. The execution method is exactly the same as mentioned above, except that the signing clause would need to specify the signatory is signing in his/her/its capacity as trustee for (ATF) the trust.

If you are an individual trustee (witness is not legally required but is good practice):

If you are a corporate trustee:

4. Partnership

If you are in a partnership, you can sign an agreement on behalf of the partnership and bind the entire partnership to it.  Ideally you would have a very clear partnership agreement which identifies who is authorised to sign what type of document, rather than every person in a partnership signing without the knowledge of the other parties.

Again, witnesses are not legally required but it is good practice to have your signature witnessed by a third-party.

Signing clause for deeds

Different to an agreement, a deed will take effect from the time it is delivered (not physical delivery but where the executing party intends to be bound – ie. at the time of signing).

This is why the signing clause to a deed would need to contain the words ‘signed, sealed and delivered’.

Other than this, executing a deed is very similar to executing an agreement, with the only exception being if you are signing as an individual, you must have your signature witnessed by a person who is not a party to the deed.

There are some exceptions for signing documents under COVID legislation. 

It is important to also note that if you are a partner and want to sign a deed to bind the entire partnership, you must be given authority to do that under a deed (ie. partnership deed). A verbal or other type of written acknowledgement is not sufficient to give you that power. In addition, your signature must be witnessed by a person who is not a party to the deed.

To find out more about deeds, please read our article about Deeds v Agreements.

Need help?

If you need help or have questions about how to correctly sign your documents, please contact us.

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What is the Difference between Trade Marks and Copyright?

What is the Difference between Trade Marks and Copyright?

by | May 19, 2021 | Copyright, Law for Online Business, Legal, Trademark

What is the Difference between Trade Marks and Copyright?

Trade marks and copyright: the difference explained

For many businesses, intellectual property is one of their most valuable assets. We often get questions from our clients on how they can best protect their intellectual property, but what we have noticed is that many of them struggle to identify what specifically they are trying to protect.

This is completely understandable because intellectual property comes in many different forms. The two most commonly used types of intellectual property protection are trade marks and copyright.

In Australia, we refer to trade mark in two words, consistent with the legislation. Overseas, it is common to combine the words to ‘trademark’. They each refer to the same thing.

Some of the frequently asked questions we get include ‘What can I trade mark?’, ‘Can I sue someone for using my trade mark?’ or ’How do I protect my copyright?’. In this article, we will answer these questions for you.

Firstly, let’s explore the difference between the two.

Trade marks – protection of your brand

If you have been running your business for some time and have established substantial goodwill and reputation, your business name becomes your brand. Your brand is your trade mark. Two of the fastest growing trade marks in 2020 were TikTok and Zoom. When you hear those names, you can immediately bring to mind the kind of services each platform offers, even if you haven’t used them yourself.

Think of a trade mark as a ‘badge of origin’. It is anything that distinguishes your goods and services from those offered by other traders in the market. It can be your business name, logo, slogan, colour or even a sound, or a smell – although scent marks are very rare.

Your trade mark is a valuable marketing tool. The purchasing decisions of consumers are often influenced by the brand, so the higher your brand recognition, the more you may want to prevent your competitors from using a similar brand to provide similar services and benefit from your hard-earned success.

Think about how people by cars, or shoes. Many people favour a particular brand of motor vehicle because it is either something they have always driven, or it has a brand promise that they believe in or relate to. For example, Toyota is known for reliability, and Ferrari is the world’s most well known racing car. In shoes, people will often favour a brand like Asics, or Adidas, or Nike depending on their preferred sport, or sports stars.

So, how do you gain the exclusive right to use your trade mark and take actions against those who infringe it?

The answer is by registration. We will talk about this further below, first lets look at how copyright is different from trade marks.

Copyright – protection of your original creative works

Copyright has more substance that a trade mark and is more likely to be judged on the amount of creative input required to develop the work to be protected. Where a word can be a trade mark, a word by itself won’t be protected under copyright.

Copyright protects the creation of literary, dramatic, musical, artistic, and certain other types of intellectual works.

When you write a book, you are the copyright owner of that book (unless you have agreed to transfer your copyright to someone else). When you create online education materials, all your materials, including videos or audios, are your copyrighted material.

Just like trade marks, your copyright materials can be extremely valuable to your business. But unlike trade marks, you do not need to register copyright to gain protection. Copyright is generated automatically upon creation of the work.

There is one exception to that rule, and that is the registration of digital works in the United States. If you want to claim protection of a digital representation of your work in the United States, you must first register that work with the Electronic Copyright Office.

To have copyright protection, you must document your ideas and have it in some sort of tangible form. The easiest way would be to write it down. A visual or audio recording is also sufficient. It is important to understand that a mere idea is not protected. This is part of the reason that businesses rely on non-disclosure agreements and confidentiality deeds. Those sorts of agreement can provide you with protection of an idea before it is discussed and before it has been documented or produced in some other form capable of copyright protection.

What protections do you need?

As you can see, trade marks and copyright are two very different types of intellectual property. What you can do to protect them is very different too.

Trade marks – protection by registration

A trade mark can exist without being registered; however registration gives you the exclusive right to use your trade mark and makes it much easier to defend.

What this means is that you will have the legal right to stop others from using your trade mark and when necessary, take legal action against them to defend your rights. Just be aware that it is your responsibility as the trade mark owner to keep an eye on the marketplace and identify any infringement or potential infringement of your trade mark. When you see someone using your brand, or something very similar to your brand, you should tell them promptly, and request that they ‘cease and desist’ the infringement.

From time to time, we have clients who have already contacted someone they believe to be infringing their mark without persuading that person to stop their infringement. Sometimes, this is because our client doesn’t have the rights they thought they did, and sometimes it is because they have stated their rights incorrectly. It is important to check what rights you have first, before making any claims. We have a number of strategies for communicating with infringers to bring about a quick resolution to your concerns.

In Australia, if you do not have a registered trade mark, it can be an offence for you to threaten legal action against someone for using your trade mark. If you do have a registered trade mark, you should be notifying infringers that you do, and asking them to stop infringing your trade mark. This is usually done with a cease and desist letter.

Copyright – protection by documenting your ideas and creating tangible material

Registration is not required to protect copyright. Copyright material is protected as soon as it is created (in tangible form, that is). As the copyright owner, you have the exclusive right to reproduce your work, commercialise it, and be recognised as its creator.

As already mentioned, the one exception is the requirement to register a digital work with the Electronic Copyright Office in the United States if you want to take action against someone in the United States for copyright infringement.

Unlike trade marks, we are not aware of any countries outside the United States that have official registers or databases for copyright, so in most cases, people won’t be able to conduct searches to see if something is an original creation.

Because there is no form of registration and in pursuing someone for infringement you might be required to demonstrate that you are the original creator of the work, it is especially important for you to use one or more of the following strategies to protect your copyright:

  • keep a record of your evolution of ideas – as evidence of the progression of your work
  1. drafts, sketches, rough recordings, plans etc
  • insert footprints into your work (eg. deliberate mistakes or hidden data that identify you as the author)
  • watermark your work
  • use technology to make it harder to copy your work electronically
  • include a copyright statement on your work – this alerts people to the fact that your work is subject to copyright and you intend to protect it © [your name] and [the year the work was created]
  • include copyright use provisions in the terms of use or terms and conditions of your website that clearly set out what people can and cannot do with your published work
  • provide your contact details so people can ask for permission to use your work
  • if your work gets used regularly in educational institutions, government or big business, then register your work with the Copyright Agency to receive any royalty payments collected on your behalf
  • have template cease and desist letters you can send to people you believe to be infringing your work, politely asking them to stop.

What happens if you don’t take steps to protect your interests?

Under both trade mark and copyright law, if you don’t take steps to protect your interests you can lose your rights.

For trade marks, you must use the mark in the form registered, and take steps to stop others using your mark in order to keep the protection that registration provides.

For copyright, if you don’t let people know that they are infringing your copyright, you can make it harder to prove that you created the work in the first place, and if you knowingly let things pass, you may be deemed to have given permission for use.

Consider creating an intellectual property register for your business so that you can keep track of your different types of intellectual property, when they were created, who created them, and what you have done to protect it. Your intellectual property is an asset to your business.

How long do protections last?

Trade marks – 10 years

A trade mark registration lasts for 10 years from when you first file your application. You can renew your trade mark registration by paying renewal fees any time before the expiry of six months after the date your registration is due to lapse.

Copyright – creator’s life plus 70 years

The duration of copyright can vary depending on the type of work and whether the owner is an individual or a company, but generally in Australia, it is the life of the author plus 70 years.

Summary

To summarise the differences between trade mark and copyright protection:

  • your brand and logo are protected as trade marks, upon registration
  • your content and materials are protected by copyright, upon creation
  • you can and should take a variety of different steps to protect your intellectual property

Need help?

If you would like help identifying your valuable intellectual property, creating an intellectual property register and protecting your intellectual property, contact Onyx Legal.

Make an Appointment

Legally Binding Contracts: What You Need To Know

Legally Binding Contracts: What You Need To Know

by | Mar 11, 2021 | Contracts, Employment, Law for Online Business, Legal, Service Agreements, Website Terms

Legally Binding Contracts: What You Need To Know

LEGALLY BINDING CONTRACTS: WHAT YOU NEED TO KNOW

There is no doubt that running a business has risks. These risks may come from your employees, your contractors, your suppliers or customers.

As a business owner, you need to take control of your business by assessing these risks and determining how to reduce these risks. One of the best ways to protect your business is to understand contracts. The terms and conditions on your website document the contract between you and every user of your website. If you don’t have any written terms and conditions, you are guessing about the agreement you have with your website users. 

When you sell your product or services, you need a written sales contract to be certain that you are protecting your interests. If you operate an online platform to market or sell your products or services, you need a contract for use of your website (usually terms and conditions). Or, if you want to protect your confidential information such as your client list and trade secrets, then you need a confidentiality deed.

Contracts are an essential part of all businesses as they form the basis of the majority of business relationships and transactions. It is, therefore, crucial for you to know when you do and do not have a binding contract. A binding contract is something that is legally enforceable. So for example, having fun with your friends in a pub is not going to be a binding contract, it’s going to be a bit of a joke and a bit of fun. In order to get a binding contract, you have to have all of the essential terms agreed and an intent to create legal relations. You also need to be able to give evidence of the terms of the agreement.

CASE STUDY

We recently had a client who entered into a contra deal with another service provider, each expecting to complete between $3,000 – $5,000 of work for the other party. Our client wasn’t able to, or wasn’t prepared to trawl through historical emails to specify the details of what they had committed to provide, and they had not invoiced periodically. (An invoice with a credit applied can assist in evidencing that an agreement was made.)

The other party provided a written engagement for services and invoiced regularly. After 12 months, the other party claimed they had received nothing from our client and took legal action to seek payment in full of their invoices. Because our client was not organised, wasn’t able to specify the agreement made or clearly identify the work produced, they ended up in a position of having to either invest in legal services to defend a court matter, or compromise the claim and pay the other party.

A bitter pill to swallow!

For a contract to be legally binding in Australia, it must contain at least the following elements:

 

1. offer

A contract is essentially a promise between people to do or not do certain things, and it starts with an offer.

An offer must be clear, unambiguous, and contain the essential terms that are to be agreed upon between the parties. That might include the parties to be involved in the contract, the timing of the contract, payment terms under the contract, and any other essential terms necessary to make sense of the purpose of the contract.

When you communicate to another person your promise, you are making an offer. For example, if you promote your services in three different packages on your website, then you are making an offer to each person who views that webpage.

When thinking about business contracts, a company that prepares a proposal is making an offer. If the business looking at that proposal accepts it, that is the first step toward a binding contract, but if they come back and says, “we want something different,” then that offer no longer stands as the offer It’s a counteroffer and the counteroffer takes the place of the original offer.

This will go on until the parties reach a point where there is an offer that is capable of being accepted, and that’s where you get acceptance.

 

2. acceptance

There must also be acceptance of the offer through a clear statement or conduct in response to the offer. Acceptance can be evidenced in a variety of ways, so it could simply be an email, a telephone conversation, or the signing of a formal written contract.

For online services, acceptance will be when your customer clicks on that button that says, ‘Buy Now’. That is accepting the offer that has been made available on the website.

Contracts are commonly accepted by signature, or by checking a box next to a statement that says you agree to the terms and conditions.  Many contracts are binding without a signature, but not all contracts can be legally binding without being signed. Contracts for the sale of land must be in writing and signed. Wills must also be in writing and signed to be enforceable without needing court intervention.

A form of signature is preferred because even if the parties did not read the contract before signing it, their signatures indicate that they have read and understood and are bound by the terms.

However, this does not mean that if your contract is not signed, it is not valid and therefore not enforceable. Parties can also accept the contract terms through their conduct or other circumstances. It all depends on the circumstances and intention exhibited by the parties. As long as it has been sufficiently communicated, it will be valid acceptance.

For example, completing work referred to in the contract signals acceptance of the contract terms, and that person will be entitled to seek payment under the contract.

A counteroffer is not acceptance, it is a new offer that needs acceptance.

 

3. consideration

A person must give some value in return for a promise to create a legally binding contract. In other words, each party must receive a benefit.  The most common form of consideration is payment in exchange for goods or services.

With the online example, you’ve clicked the ‘Buy Now’ button. The consideration is the payment of money, and as soon as that consideration has passed, there is a binding contract in place.

Using the example of a proposal, once the terms of the proposal are agreed and accepted by one party, either the payment of money or the start of work or both, will be consideration. The essential terms of the contract must be agreed before the point of consideration to be binding.

So, if you ask a client to pay first and then give them terms and conditions after payment, then the terms and conditions won’t be binding because the consideration has occurred before those elements of the contract are agreed. This can be different where a deposit is conditional upon certain terms being accepted.

Terms and conditions of a contract given to a purchaser only after the contract was formed will not be binding.

 

4. Intent to create legal relations

As entertaining as it might be to dare a friend in a pub to do something, if they do it, your payment to them is only enforceable based on your goodwill and is not legally enforceable.

This is different to a restaurant promising that a huge meal is free if you can eat it all. That can be enforceable because the restaurant intends people to rely upon that promise in ordering the meal in the first place.

    other elements of a binding contract

    Aspects of contracts that can affect whether or not a contract is binding include capacity, mistake, illegal intent, fraud, misrepresentation, duress or no intent to create a legal contract.

     

    capacity

    Capacity is whether somebody has the legal capacity to make a contract. Only an adult can enter into a contract; that is somebody over the age of 18 years. A person under 18 years does not have legal capacity to form a binding contract.

    A person with a disability or an older person who has lost capacity through dementia or Alzheimer’s disease may not have capacity to make a contract, or may have only intermittent capacity.

     

    mistake

    A mistake in a contract can sometimes invalidate a contract. Typographical errors are generally not fatal mistakes.

    Usually, a party will be bound by the documents they signed, whether or not they’ve read or understood them. However, where a party signs a contract that they fundamentally believe to be something different to what it is, this may be a mistake sufficient to affect the binding nature of the contract. For example, if a person believes that they are purchasing a copyright work (say a painting) where in fact, what they’re signing is only a limited license to use that copyright work for a limited purpose (hanging  the painting in their office). In those circumstances, there is quite a significant difference between what the first person understands they are paying for, and what they are actually getting under the contract.

    That may give rise to a doctrine of what’s called a non est factum, which means, ‘it’s not my deed’ or ‘it’s not my contract’ or ‘I didn’t agree to this’. It is very rare to argue this type of mistake.

    There are other types of mistakes, for example, one party could be mistaken about what it is they are buying. A party might think they are buying a website with all the existing content and so on, where in fact, what they’ve done is entered into a contract to buy a domain name.

    Now, it is likely that the seller in that circumstance knows that they are only selling a domain name and they probably have a level of awareness that the purchaser is mistaken as to what they are actually getting.

    In those circumstances the purchaser may not be able to end the contract, there might not be a remedy under contract law or common law, but there may be a remedy in equity. In equity, the party who knew the other party was mistaken as to what was involved in the contract, may be required to allow the other party to revoke the contract or to have rectification of the contract.

    Rectification is amendment to the contract to make it reflect what was understood to be the terms of the contract. Occasionally, both parties to a contract have mistaken some aspect of the contract, but different aspects.

    There have been some recent cases in Queensland regarding property development, where two parties to a development contract had different understandings of different aspects of the contract and they were ventilated when it went to court. Again, it is rare to have a circumstance where there is a unilateral mistake by both parties about different issues to the contract.

    A common mistake is where both parties are mistaken about something to do with the contract. A good example is where both parties think a description of a property refers to a visual address they agree upon, only to find in a property title search that the property they thought they were transacting is the property next door.

    For online content, the contracting parties might both think that the website is built with a particular programming language, for example, HTML, when it is built on a different system or with different programming language.

    Where there is common mistake, all party’s expectations around the contract are altered because something has risen that none of them were aware of when they first went into the contract. Again, the remedy is more likely to be an equity in terms of a rescission of contract or rectification of the contract, rather than a specific ability to terminate the contract. However, if all parties are mistaken and they have a mutual agreement to end the contract, then that is not a problem at all. It is only a problem when the parties are in dispute.

     

    illegal purpose

    Another aspect that will affect the binding nature or enforceability of a contract is whether or not it’s for an illegal purpose. A contract for the purpose of committing a crime is not enforceable. There are differences in criminal law in the different states and territories of Australia.  There are also proposed changes around Australia regarding slavery laws at the moment.

    Consider modern slavery, such as people immigrating from overseas and then having their passports taken from them and essentially going into indentured labor services. An offer to find work for someone in exchange for their payment to get help in immigrating will not be enforceable if it results in indentured labor.

     

    fraud or misrepresentation

    If there is misrepresentation or fraud before the contract is made, which influences one party to enter into the contract, then the contract may be challenged. Fraud is a deliberate untruth that can be relied upon to void a contract. Misrepresentation is something less.

    Consider an IT Service Provider. They say that they will be able to provide you a secure computer system and a phone system (being very simplistic, obviously), for a set monthly fee and an installation cost. Then you find out halfway through installation that it simply will not work with your existing systems, unless additional products or services are purchased, or there is some variation to what needs to be done.

    This may be misrepresentation, particularly if you have asked the service provider to review what your requirements are and tender on that basis, then you have accepted the tender and they can’t deliver what they said they would deliver. A remedy for misrepresentation is likely to be damages.

     

    duress

    Coercive control is a form of domestic violence that is very topical at the moment, and difficult for the legal system to articulate. Duress or coercive control is putting someone in a position where they feel they have no choice but to enter into the agreement.

    In a business situation, holding up payment pending an agreement can be a form of duress if the party withholding payment knows that it will have an adverse effect on the party due to be paid, and they intend to use that as leverage for future negotiations. It is effectively holding the company that is owed money to ransom for money it is already owed.

    Although the creditor company might have remedies in terms of taking the debtor to court for recovery of payment, the time involved in recovering that payment may be sufficient to effectively put the creditor out of business without the payment due being received.

    A threat can also form duress, unless there is a term of the contract that was agreed which supports it. “If you don’t sack that person, we will terminate this contract” is a threat unless the contract includes a provision that you can require the contractor to replace people if you are not happy with them.

     

    spoken contracts, or partly spoken and partly written

    An oral contract can also be valid and enforceable. A contract can be partly written, partly verbal and partly included in an exchange of emails. [https://onyx.legal/articles/contract-dont-have-to-be-in-writing/]

    For this reason, you need to be aware of when you’re making promises to other people and when you might be creating binding contracts, whether you intended to or not. Having a formally written contract with signatures on it is proof of the contract that was agreed. The documentation is not what is required to make it binding.

    Evidence obviously becomes an issue when contracts are oral. That is when disputes end up in courts, with different people claiming perfect, and differing, recollection of what was agreed.

     

    contracts and deeds are different things

    There is a difference between deeds and contracts. Contracts need consideration, which is the doing or giving of something in exchange for understanding that the other party to the contract or the other parties to the contract have obligations that they will fulfill in exchange.

    A deed is binding without consideration, and as a result, there are specific rules around the signing of a deed before it can become binding.  

     

    remedies

    Once a contract is formed, the nature of the remedy depends upon the nature of the problem in the contract and can include a variety of remedies from voiding the contract from the beginning through to payment of damages, specific performance, damages for losses occurring within the contract and so on. These all depend on the terms of the contract agreed between the parties.

    Want more information?

    We love writing contracts. Especially contracts you understand, so that your customers understand them too. Keep it simple. Let us know what contracts you would like to put in place in your business by booking an appointment. 

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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

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