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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. 

    Make an Appointment

    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

    COVID-19 and Signing Contracts

    COVID-19 and Signing Contracts

    by | Jan 4, 2021 | Contracts, Law for Online Business, Legal, Service Agreements

    COVID-19 and Signing Contracts

    COVID-19 and Signing Contracts

     *Last updated 12 December 2021*

    Very few documents are legally required to have a ‘wet’ signature. That is a signature applied using pen and ink. 

    Most business contracts you enter into don’t require a ‘wet’ signature and may not require a signature at all to be binding. Contracts are not formalised by a signature; a signature simply serves as good evidence that a person agreed to the contents of a contract. Some examples of documents that would normally need a wet signature are: 

    • Wills
    • powers of attorney
    • deeds
    • documents that need to be witnessed, verified or authenticated in some way
    • some court documents
    • some documents for lodgement with land titles offices
    • some governance documents, such as minutes of meetings of directors
    • some regulatory documents, depending on the regulator 

    Since the introduction of electronic transactions legislation by the Australian federal government and most Australian state and territory governments around the year 2000, it has been possible to sign a lot of agreements electronically. 

    Rules do apply. 

    Broadly speaking, the requirements for using an electronic signature are:

    • you must be able to identify the person signing, either directly or through additional evidence
    • the person signing must agree to be bound by their signature
    • the method for identifying the signatory and his or her intention in the circumstances is reliable
    • all the parties agree to accept e-signatures, which agreement can be inferred by conduct 

    Provided that all parties agree, a typewritten name can be used as a signature.  Consider that you may be one of many people in business who have a formal typewritten signature as a standard footer to your emails.

    Case study

    In Stellard’s case (Stellard Pty Ltd & anor v North Queensland Fuel Pty Ltd [2015] QSC 119) a signature was required because the transaction involved property. There requirement for a signature was in s.59 of the Queensland Property Law Act, which says “No action may be brought upon any contract for the sale… of land… unless the contract… or some memorandum or note of the contract, is in writing, and signed by the party to be charged…”

    All exchanges relied upon were either via email, or by conversation. Stellard argued that they were entitled to rely on NQF’s acceptance of their offer to purchase, contained in an email, by virtue of the Queensland electronic transactions legislation. The Court decided that:

     

    • the parties agreed to accept electronic signatures through their conduct, being negotiation via email including stating the offer in the body of the email and receiving the acceptance in the body of an email
    • the identity of the person sending the email acceptance was found through evidence of conversations held earlier than the date of the email, and an admission of the sender that they were the person sending the email

    What does that mean for you? 

    Be aware of what you are negotiating and agreeing to by email. 

    CHANGES TO 10 DECEMBER 2021

    UPDATE: Electronic signing of certain documents has been made permanent in Queensland, Victoria, and New South Wales. We are yet to see if the other states will follow suit.

    Unfortunately, electronic execution by companies and the holding of hybrid and virtual meetings have not yet been made permanent under the Corporations Act and will be considered at the next Senate sitting in 2022.

    CHANGES TO 1 JULY 2021

    Federal

    On 23 April 2021 ASIC extended their temporary ‘no action’ position on the following activities for reporting dates up to 7 July 2021:

    • the holding of meetings using appropriate technology;•
    • electronic dispatch of notices of meeting including supplementary notices; and•
    • public companies holding AGMs within an additional 2 months on the extended term.

    There is no allowance or exemption for signing documents electronically. Wet signatures are still required for minutes of meeting, although scanned copies of documents can be kept.

    ACT

    On 20 February 2021 The ACT Parliament extended the timeframe of relevant COVID legislation.

    NSW

    On 25 March 2021 NSW Parliament extended COVID timeframes under a variety of legislation with the COVID-19 Recovery Act 2021, to 31 December 2021, but excluded the Electronic Transactions legislation, which had been previously amended on 28 September 2020 by the Stronger Communities Legislation Amendment (Courts and Civil) Act 2020 until 1 January 2022.

    QLD

    On 14 April 2021 amending legislation was passed by QLD Parliament to extend the expiry date of various legislation impacted by COVID measures to 30 September 2021. However, the time available for electronic signing and witnessing of Wills and enduring powers of attorney ended on 1 July 2021.  

    SA

    Changes were made by SA Parliament in February 2021.

    VIC

    On 23 March 2021 Victoria led the way for all Australian jurisdictions by permanently adopting changes to the Electronic Transactions (Victoria) Act 2000, enabling witnessing of signatures by audio visual link, and the electronic creation and signing of Deeds and mortgages.

    No other changes were tabled before parliaments around the country before 31 March 2021.

    Signing documents during COVID-19 restrictions

    After COVID-19 was declared a pandemic and Australian federal and state governments started enacting temporary legislation for greater flexibility, laws were introduced to change the way certain documents, which usually required a wet signature and a witness, could be signed using electronic means.

    Changes are not consistent around Australia. Each state or territory has slightly different requirements and not every state or territory enacted relevant laws, so you do need to be conscious of the location of the person signing, and the applicable rules in that place, and when those rules will expire:

     

     

    Legislation

    Start Date

    Expiry Date

    Federal

    Corporations (Coronavirus Economic Response) Determination (No. 3) 2020

    5 May 2020

    EXPIRED*

    ACT

    COVID-19 Emergency Response Act 2020

    14 May 2020

    12* months after COVID emergency ends

    NSW

    Customer Service Legislation Amendment Act 2021 (NSW)

    Electronic Transactions Amendment (Remote Witnessing) Act 2021 (NSW) 

     

     

    PERMANENT CHANGE

    NT

    N/A

     

     

    QLD

    Justice and Other Legislation Amendment Act 2021 (QLD)

     

     

    PERMANENT CHANGE 

    SA

    Oaths (Miscellaneous) Amendment Act 2021 (SA)

    Oaths Regulations 2021 (SA)

     

    PERMANENT CHANGE – Affidavits and Stat Dec

    Tas

    Notice under Section 17 of COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020

    3 Apr 2020

    EXPIRED 

    Vic

    Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 amending Electronic Transactions Act

     

    PERMANENT CHANGE

    WA

    COVID-19 Response and Economic Recovery Omnibus Act 2020

    12 Sept 2020

    31 Dec 2021

    *The above table mentions only the first applicable legislation, which is likely to have been amended by further legislation over time, resulting the expiry dates listed. Expiry dates are subject to change.

    Signing of corporate documents under australian federal law during covid

    Federal law covers signing for and on behalf of companies, as well as the holding of shareholder or member meetings electronically. The legislation was due to expire on 5 November 2020 but was extended.

    The Corporations Act is specifically excluded from electronic transactions legislation, so you will normally require a wet signature of directors or secretaries who are signing a document in accordance with s.127 of that Act. The document can still be shared electronically, it just cannot be signed electronically.

    Pursuant to s.127 you would usually require two directors, a company secretary and a director or a sole director and secretary to sign on behalf of a company. You usually require both people (if two are signing) to sign the same document on behalf of the company.

    The temporary legislation allows for electronic application of signatures when signing for a company, which can occur on separate documents, provided that each document contains the entire contents of the document, and a method was applied to identify each person signing and their intent to be bound, and that method was reliable.

    A document signed on behalf of a company another way can still be binding. Section 127 does not limit the ways in which a company can sign a document. 

    Permanent changes to the Corporations Act will be considered at the next Senate sitting in 2022 which would allow for electronic signatures and virtual meetings.

    Nothing in the legislation appears to enable the electronic signing of minutes of meetings, whether of a board or shareholders.

    Signing documents in the Australian Capital Territory (ACT) or New South Wales (NSW) during covid 

    Measures were introduced to allow for the witnessing and attestation of documents including affidavits, Wills, powers of attorney and health directives. Witnessing can be done by audio visual link provided that:

    • both video and audio are active
    • the witness watches the signatory sign in real time
    • the witness confirms the signing was witnessed by signing the document or a copy of it
    • the witness is reasonably satisfied that the document signed and the document witnessed are the same
    • the witness includes a statement on the document about how the document was witnessed in accordance with the ACT legislation.

    To demonstrate confirmation of witnessing the original signature, that can be done by signing a full copy of the document (counterpart) as soon as possible after witnessing the original or signing a scanned copy of the document signed by the original signatory.

    These changes have now been made permanent in New South Wales.

    Signing documents in the Northern Territory (NT) during covid

    Although the NT does have electronic transactions legislation, no specific amendments have been made to that legislation as a result of COVID. As a result, any documents that needed a wet signature in the NT before COVID restrictions started, still do.

    Signing documents in Queensland (Qld) during covid

    UPDATE (8 December 2021): Queensland has made permanent the electronic execution of certain documents such as deeds and general powers of attorney for businesses. However, the electronic execution of wills and enduring documents has NOT been made a permanent change and had expired.

    Queensland appears to have adopted the most complicated provisions. In Queensland, the witnessing a Will, powers of attorney, affidavit or statutory declaration can be completed by audio visual link, provided that:

    • the person witnessing is an Australian legal practitioner, justice of the peace (JP) or commissioner of declarations, notary public or other person mentioned in the regulations
    • the witness completes a certificate that is kept with the document
    • the witness sees the person sign in real time
    • the person signing signs each page of the document
    • the witness is satisfied that the signing person is making the document freely and voluntarily

    Confirmation of witnessing, in addition to the required certificate, can be done by signing each page of a counterpart or scanned copy of the document signed by the original signatory, as soon as possible.

    There are additional variations for affidavits and statutory declarations.

    Documents other than Wills and enduring powers of attorney can also be signed electronically provided the method used to identify the signatory and their intend to be bound is reliable, in the circumstances.

    Deeds can be signed electronically without a witness provided that the document is clearly identified as a deed. This applies to both individuals and companies, and for companies, where a second director or secretary is to sign, they can sign a counterpart.

    Signing documents in South Australia (SA) during covid

    While South Australia made amendments to make meetings by electronic means easier, rather than expanding the ability to apply electronic signatures to documents they simply expanded the categories of professional people documents could be sworn or attested in front of.

    Witnessing documents by audio visual means is expressly excluded.

    Some alterations were made for property related transactions in June 2020.

    Signing documents in Tasmania (TAS) during COVID

    Rather than specifying document, in Tasmania the legislation is focused on actions taken. So where a document requires a physical actions such as the making, taking, receiving, swearing, signing or witnessing of a document, those actions can be completed electronically, or by audio visual link provided that:

    • the witness watches the signatory sign in real time
    • the witness attests to the signing by signing the document or a copy of it
    • the witness includes a statement on the document about how the document was witnessed in accordance with the Tasmanian legislation.

    Signing documents in Victoria (VIC) during COVID

    Victoria expanded the categories of people who could take oaths and affidavits first, before then introducing broader measures for the use of electronic signatures. Timing is very important in Victoria. A witness must apply their signature on the same day as the person signing the document.

    Witnessing is permitted by audio visual link provided that:

    • the witness watches the signatory sign in real time
    • the witness confirms the signing was witnessed by signing the document or a copy of it on the same day
    • the witness includes a statement on the document about how the document was witnessed in accordance with the Victorian regulation.

    There are specific rules around attachments, counterparts and copies of documents that must be met to comply with Victorian requirements.

    Under the Victorian Oaths Act a person can electronically write anything on a document, sign, initial or date it electronically under the COVID rules. There is also provision for Wills to be signed and witnessed by audio visual link, provided that the actions result in one document with all signatures and statements relevant to any signing by electronic means, and that all actions are taken on the same day.

    Signing documents in Western Australia (WA) during COVID

    Witnessing can be done by audio visual link provided that:

    • both video and audio are active
    • the witness watches the signatory sign in real time
    • the witness is satisfied that the document signed and the document witnessed are the same
    • the witness signs the document or a copy of it
    • the witness includes a statement on the document about how the document was witnessed in accordance with s.23 of the WA legislation.

    To demonstrate confirmation of witnessing the original signature, that can be done by signing a full copy of the document (counterpart) as soon as possible after witnessing the original or signing a scanned copy of the document signed by the original signatory.

    Want more information?

    Where documents do need to be signed in a particular way, or witnessed, to be enforceable, then it’s important you understand the requirements that apply in the place of the person signing if you want to be able to rely on those documents in the future.

    If you need help with deeds, agreements, Wills or powers of attorney and worry about what COVID rules apply, contact us.

    Make an Appointment

    Event Release Forms: Everything Yours Should Include

    Event Release Forms: Everything Yours Should Include

    by | Dec 2, 2020 | Contracts, Law for Online Business, Legal, Service Agreements, Training

    Event Release Forms: Everything Yours Should Include

    event release forms: everything yours should include

    As a small business owner, do you run events, co-host events, sponsor events or plan to run events to help propel your business forward faster?

    The advantages of holding events are obvious. Not only will you be meeting new people and adding new prospects to your client list, but it is also a good opportunity for you to gain valuable insights and understand the market better. Events can be face-to-face or online or a combination of both.

    Events come in many shapes and sizes – meetings, conferences, online classes, training sessions, networking sessions, product launches, fundraising events and many more. No matter what type of event it is, one thing that you should always consider having is an Event Release Form.

    Essentially, an Event Release Form is a contract or agreement for participation in an event. Like all other contracts, its purpose is to protect your business interests and limit your liabilities, but also to protect the interests of your participants. Just like running a business, you do not want to expose yourself or your valuable clients to any unnecessary risks when running an event.

    Hand-shake contracts are great in theory. If you have ever been in a situation where you believed everyone was on the same page and later found out that there was a miscommunication, then you probably understand the importance of having a written contract.

    Setting the rules for participation just before the start of an event can remind everyone of their expectations and obligations.

    WHAT is the purpose of an event release form?

    The event release form is to:

    • introduce the purpose of the event, eg. education only
    • remind participants of what is excluded, eg. not providing legal advice
    • require participants to take responsibility for their own behaviour, mental and physical health during the event
    • make parents or guardians aware of their responsibility for any child they bring
    • alert participants to the fact that other products or services might be promoted for sale
    • refer to privacy obligations
    • cover your rules for recording of the event by you and your participants
    • limit your liability

    when do you provide an event release form?

    For a face-to-face event, you want participants to read and sign your form before they enter the event venue. 

    For an online event, you want participants to check a box agreeing to your release before they can access the event online.

    how long should you keep an event release form?

    You should keep a copy of your event release forms for as long as your business operations suggest you may have a risk to the business arising from that event.  Generally speaking, financial claims are barred 6 years after becoming aware of a right to claim and personal injury claims are barred 3 years after becoming aware of a right to claim.  Many businesses keep documents for 7 years for accounting reporting purposes.

    can you use an event release form for multiple events?

    You should require participants to complete a new form each time they attend an event, even if the one participant attends a variety of events you have on offer. A multi-day event, where it is clearly still the one event, will not need a daily release form, or a release form for each session, just a release for the event itself.

    do you need separate event release forms for children?

    It is easier to create a release form that have room to name one or more children who have come with their parent or guardian, and which binds the parent or guardian in respect of each child. You don’t need to have separate forms.

    what if a participant does not want to be filmed?

    If a participant doesn’t want to be included in photos or videos, then consider allocating a part of the room that is not going to be filmed or photographed and ask that they sit in that area, explaining that seating elsewhere will be caught on film. For online participants, you can ask that they keep video turned off to avoid being captured or use technology to exclude them.

    Postproduction editing tends to be complicated and expensive. Practical measures before filming make permissions easier to manage.

    what if we want to restrict participants from recording the event?

    Your terms and conditions before registering for the event should specify that recording will be prohibited, then the Event Release Form should also state that recording is prohibited and participants may be removed if caught, and an announcement should also be made at the beginning of the event. As an alternative, some event organisers are now arranging specific digital interactive activities during the event to encourage participants to share it live on social media or ask questions during the event. 

    is the event release form the same as event terms and conditions?

    Your Event Release Form is NOT the same as the terms and conditions your participant signed up to before they purchased or registered for your event. Event terms and conditions are more comprehensive and need to be provided before the point of purchase, and agreed to by the participant, to be binding.

    Event terms and conditions will cover in detail the things like:

    1. What are you offering, and what are you not providing? 

    Introduce what the event is about and what services you will be providing. This is to help set clear expectations for participants and prevent any disputes from arising as a result of ‘unmet’ expectations.

    If you are running a physical event, will you be providing venue or catering? If catering, is it limited to tea and coffee or a full buffet lunch? If you are running an online event, will you be providing preparatory or post event audio or visual materials such as videos or PowerPoint slides?

    For example, if you are an online fitness trainer, depending on how you offer your courses, you may want to state that you will be engaging your participants in activities but will not be giving any dietary advice. You may also want to state that it is the participant’s responsibility to have a safe space and the appropriate equipment to hand to carry out any techniques to be demonstrated during the course.

    2. payment terms

    If you are charging a fee for people to attend your event, then your terms and conditions should include payment terms. Include any payment options you are offering, such as the ability to pay by instalments and what payments methods are available.

    For example, you may want to provide the option to participants to pay in full by direct deposit to your nominated bank account before attending the event, rather than by credit card.

    3. cancellation or refund policy 

    Things do not always go as planned. In the middle of 2019 very few people would have predicted that face-to-face conferencing would be put on hold for most of 2020 due to COVID restrictions. Venues do occasionally burn down. Guest presenters do sometimes drop out due to personal reasons. You may end up having to postpone or even worse, cancel your event.

    If you don’t want to give refunds, your terms and conditions need to be clear about what you will do if you have to postpone an event. As long as the postponement was outside your control and you remain ready, willing and able to give credit toward a future event, or ensuring a space is available in the next, or one of the next 3 scheduled events, your may not be legally obliged to give a refund.

    But what if your participants are the ones that want to cancel or withdraw from your event?

    You should set out clearly in what circumstances you participants’ cancellation would be a ‘valid’ cancellation, which would entitle them to a refund. Factors for you to consider include the reason for their cancellation (eg. change of mind, medical reasons) and how long before the event they notify you of their intention to cancel. You should also specify in what circumstances a refund will be made in full, when it will be made in part and whether an administration fee will be deducted.

    Having a clear cancellation policy can deter participants from simply changing their mind about attending.

    4. disclaimer

    When you make a statement to the effect that you are not responsible for something, then you are making a disclaimer. Its purpose, of course, is also to protect you from potential disputes or legal issues.

    If you do not want your participants to be under the impression that all information you provide will be accurate and therefore safe to rely on, then you need to say that. If expect your participants to take responsibility for their own health and wellbeing at your event, then that needs to be spelt out.

    5. limitation of liability and indemnity

    The last thing you want is to have someone bring a legal action against you for a loss they claim to have suffered by attending your event. A limitation of liability and indemnity clause is to protect you from being held responsible for losses or damages that were not caused as a result of your negligence.

    6. intellectual property

    The materials that you make available to your participants are likely to be your intellectual property and valuable assets of your business. It is important to correctly identify your intellectual property and draft effective clauses to protect it from being misused or exploited by your participants against your wishes.

    7. personal information

    You are collecting personal information from your participants when they register for your event or provide you with their contact details in any other way. To ensure that you are complying with your privacy obligations, you need to have a privacy policy and link that to your terms and conditions.

    If you wish to take photos or videos of your participants during your event and later use that footage to market your business, you will also need your participants’ consent and release, because images can also be personal information.

    Want more information?

    If you plan to conduct online or offline events, consider what terms and conditions and release forms you need to protect you and your business. Contact Onyx Legal and we can work with you to prepare documents tailored to your business.

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    Disclaimers: What They Do and Don’t Protect You From

    Disclaimers: What They Do and Don’t Protect You From

    by | Oct 19, 2020 | Contracts, Dispute Resolution, Law for Online Business, Legal, Service Agreements, Website Terms

    Disclaimers: What They Do and Don’t Protect You From

    Disclaimers: What they do and don’t protect you from 

    As a business owner, it is likely that you run a website, blog or social media to help people find you, advertise and promote your products or services. It is the most effective way of attracting potential customers or clients in this digital age.

    When someone visits your website, you are offering them information of some sort. Are you always 100% certain that all the information on there are accurate and up to date?

    Even if your answer is yes, do you know how your customers or competitors are using or interpreting that information? The best you can do is hope they are using it the way you intended, but really it is out of your control.

    This is why having a disclaimer is always a good idea. It can better protect you and your business.

    What is a disclaimer?

    Almost all websites have disclaimers. You must have seen one before. Sometimes disclaimers are hidden in terms of use, and sometimes they have their own individual link in the footer, and sometimes they appear in every footer, whether that is on a website or email.

    A disclaimer is a notice that you display to protect you from potential legal issues; it is a statement that you are not responsible for something. To give you an example, here is Wikipedia’s no guarantee disclaimer:

    “Wikipedia cannot guarantee the validity of the information found here. The content of any given article may recently have been changed, vandalized or altered by someone whose opinion does not correspond with the state of knowledge in the relevant fields.”

     

    So, why is it important to have a disclaimer?

    Well, consider the case where someone claims that they have relied on your information and suffered loss as a result. Let’s look at an example.

    A marketer promotes pre-sales of a real estate development through a website. (A common cause of claims in court.)

    The website has some images that are ‘artist’s impressions’ of what the development will look like when it’s finished and might contain other information like a copy of a survey diagram. It might also contain a list of finishes to be included in the final development.

    Survey diagrams are really things you should check with a surveyor, engineer or other professional, rather than take from a marketing brochure, but that might also depend on who is providing the brochure and what expertise they say they have.

    The website should clearly caution the buyer that the artist’s impressions might not be true to the end result and that a buyer should make their own enquiries to verify information before they decide to buy; like checking the inclusions in the contract with the builder. If there are no clear statements, it is possible that a buyer could claim they were misled by the information on the website and would not have bought otherwise. Then if the property turns out being something they don’t want or doesn’t have the value they expected it to have, they sue the marketer to try and recover their losses.

    You do not want to put yourself in a situation like this, where your business reputation could be damaged, and you could be found liable to pay legal costs to defend yourself and possibly someone else’s losses.

    Some other common examples we see are:

    • people who have a lived experience with a physical condition or disease, but no formal medical training
    • people who have successfully built a business without any formal qualifications
    • people who have successfully overcome an adversity and again, don’t have any formal qualifications

    Out of a genuine desire to help others and share the benefit of their experience, a person like this might establish a business around coaching or educating others on how they achieved what they did.

    The thing is, not everything works for everybody consistently, and there is a risk if you put yourself in this kind of position that you will encounter a person your services don’t work for, and they say the relied completely on what you said. In that situation, a disclaimer might just help you avoid costly court proceedings.

    And for something completely different…

    Now consider a completely different situation where your website makes it possible for other people to post comments, reviews or advertisements. Forum sites and advice sites like Quora are like this.  All the information posted by third parties could mislead your customers, clients, or visitors of your website, and you could be the one exposed to liabilities because of their actions.

    By having a clear and comprehensive disclaimer for your websites, and building behaviour and processes consistent with the terms of your disclaimer, you put yourself in the best possible position to:

    • protect your rights;
    • limit your liability; and
    • disclaim third party liability.

     

    Do you need a disclaimer?

    Yes, and no.

    Being in business involves a certain level of risk and some types of business are riskier than others, and some types of business people are happy with more risk than others.

    We need to look at your business, your background, your products and your customers to form an opinion on how important it is for you to use disclaimers.

    Generally speaking, we will suggest you do use a disclaimer on your website.

    This is because any member of the public that has internet access can see the content on your website, and you are responsible for all the content you put on there. Even if you are not making money from these websites (for example, you might be posting a blog simply for informational purposes), you must still take reasonable steps to ensure that visitors of your website will not be misled by any information you share.

    However, if your business is fairly straight-forward and well understood, like a barber or hairdresser for example, you probably don’t need a disclaimer. Everyone knows what barbers and hairdressers do. The worst that can happen is probably a bad haircut, or a bad colour, or a clumsy shave. The risk to the business is the cost of the service, and maybe the cost of fixing the problem, or the customer having someone else fix the problem. The problem probably won’t cost the business more than $300. So, will a disclaimer make any difference? Probably not.

    On the other hand, coaching can be a really interesting area where you as a coach should be careful about what you say you can do for someone, particularly when results are going to be dependent on how much effort and application your client invests in doing what you have advised them to do.  If you are offering a high-end coaching package with a purchase price over $10,000, we would recommend a disclaimer.

    If you run a website or email list that provides information which is likely to be relied on by visitors  to your website, or subscribers on your email list, you are strongly encouraged to have a disclaimer in place. Particularly if you provide specialised information, in areas such as health, managing money or an industry that is regulated.

    If your website provides specific steps in a process or a guide for people to follow, you could also increase your legal risk.

    An example might be if you are an online fitness trainer and you post videos that step your clients through a workout. If someone who watches and follows your video injures themself, then you run the risk that they sue you for their injury. But if you have a disclaimer in place which covers your legal obligations and placing some responsibility for your clients behaviour back on to them, you give yourself a much higher chance of avoiding liability.

     

    What kind of disclaimer do you need?

    You may run different types of websites, and the type of disclaimers you need will vary.

    • Websites

    What disclaimer you need depends on whether you use your website to sell products or services, or merely to publish information. If you use your website to sell a product, someone could get hurt when using your product. Whereas if you post information on your website, someone could misconstrue that information and suffer loss as a result.

    You might need a ‘no responsibility’ disclaimer which states that you are not responsible for any damages people suffer as a result of using your products or services. Or you might need a ‘views expressed’ disclaimer to inform readers that the information is only your view or opinion and is not intended to be relied upon without advice specific to their circumstances. 

    • Blog

    If you intend on giving information on your blog which you are not qualified to give, you need to have a disclaimer to explain the limits of your qualifications and to recommend that people seek professional advice relevant to their circumstances.

    If you are not a health professional but provide information about a health conditions, you need to make it very clear that readers should not rely on your information without seeking their own independent medical advice. The same applies for other types of expert advice including financial or legal advice.

    If you are merely passing on information, you should indicate that it is work of another and that you are not endorsing it by making it available on your website. 

    • Emails

    You may need a disclaimer in your emails, depending on the type of business you run and how you use your email. 

    For instance, if you email contains advice that you are not qualified to give, you should include a disclaimer to the effect that you are not an expert in that field, that you are only offering a suggestion and that readers who act on the information do so at their own risk.

    A confidentiality disclaimer can also be beneficial if you are sending confidential information. The disclaimer should state that the recipient must not use, reproduce, copy or disclose this information other than for the purposes for which it was supplied. 

    • Social media (eg. Facebook, LinkedIn, Instagram)

    Again, this will depend on your business and how you use social media.

    One of the biggest risks with social media is that third parties can comment, post, or advertise on your page. A disclaimer to limit your liability for any actions or errors of third parties will be of assistance if you are also monitoring your social media pages and removing posts or qualifying posts and comments that could be misleading.

     

    How do you write a disclaimer for your website?

    It is not possible to have a disclaimer that could work for all types of businesses or websites. Each disclaimer is different depending on what you do and how you do it. Like we said earlier, we need to look at your business, your background, your products and your customers to form an opinion on how important it is for you to use disclaimers.

    To help you decide what you should include in your disclaimer:

    Step 1 – Think about what rights you want to protect

    Step 2 – Think about what liabilities you might be exposed to

    You need to identify the possible risks and scenarios that could expose you to legal liability.

    Consider:

    • Warning your readers that your content is merely an opinion and not a fact
    • Alerting your readers to the potential mistakes and inaccuracies in the information
    • Informing your readers that you are not offering professional advice and your content is only informational, and that they should consult a professional before making any decisions
    • Disclaiming liability for any errors in the information that third parties post on your websites (together with a process for reviewing the accuracy of information shared, or making it clear that older posts might not be accurate.

     

    When are you not protected by a disclaimer?

    If your disclaimer contains terms that attempt to exclude a legal liability that cannot be excluded, your disclaimer will not shield you from liability. If it is contrary to law, it might be void, but if it is legally compliant, it might still limit your potential liability.

    Most people get in trouble when they say or do things that are inconsistent with their disclaimer.

    Always keep in mind that your disclaimer must be consistent with your behaviour and business processes and any representations that you make, whether on your website or through your conduct. If anything on your website or your conduct creates a different impression for your customer or client, your disclaimer will not protect you.

    Your disclaimer also needs to be placed somewhere where it can easily be seen either by customers using your website or receiving your emails or communications in any other way. If your disclaimer is too hard to find or too small that is can be easily missed, it will not protect you.

    Conventional website design will usually have a link to your disclaimer in the footer of your website.

     

     

    do you still need insurance when you have a disclaimer?

    Yes.

    Even if you have a disclaimer in place, you should still hold adequate liability insurance to protect business activities. Having a disclaimer does not mean you are guaranteed to be protected from all liabilities. If a claim is brought against you, it is up to the courts to determine the effect of your disclaimer and to what extent your liability is limited. The more vague or confusing your disclaimer is, the more unlikely that it will protect you.

     

     

    Want more information?

    A well-drafted, quality disclaimer can help you to effectively manage your customer or clients’ expectations and set the boundaries for your responsibility and liability.

    Book an appointment with Onyx Legal so that we can work with you to identify the most appropriate form of disclaimer for your business and your customer base. 

    Make an Appointment