COVID-19 and Signing Contracts

COVID-19 and Signing Contracts

COVID-19 and Signing Contracts

COVID-19 and Signing Contracts

 

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. 

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

22 Mar 2021

ACT

COVID-19 Emergency Response Act 2020

14 May 2020

3 months after COVID emergency ends

NSW

Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020

25 Mar 2020

 

26 Mar 2021

NT

N/A

 

 

QLD

Justice Legislation (COVID-19 Emergency Response—Wills and Enduring Documents) Regulation 2020

15 May 2020

30 Apr 2021

SA

COVID-19 Emergency Response (Section 16) Regulations 2020

20 Apr 2020

6 Feb 2021

Tas

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

3 Apr 2020

 

Vic

COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020

25 Apr 2020

26 Apr 2021

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 have now been tabled before parliament for consideration in 2021 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.

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

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. 

How to Deal with Threatening Legal Letters

How to Deal with Threatening Legal Letters

How to Deal with Threatening Legal Letters

Want to know how to handle nasty legal demands?

I’m on the road in between meetings today and just thought I’d share a story with you. I was speaking to a friend earlier and they said, “Oh, that’s such a great story. More people should know it.” So I thought I’d share it with you today.

We had a client who received one of those nasty letters of demand in the mail saying, “You’re in breach of our trade mark. Hand over your domain name, hand over your website. If you don’t do it in 24 hours or seven days or something ridiculous, then we’re going to take you to court and see you for a whole bunch of money.

Now the client came to us and said, “Can you represent me in court proceedings?” I responded, “Hey, let’s stop and look at this in the moment and see if that is your only option.

Court is not the only option

When we looked at the value in the client’s business, it was not in the trade mark. This is a client who had been selling a product that they imported from the UK and the company in the UK had registered the trade mark in the UK. There was a competing company in the US and they had registered the trade mark in the US. The American company came to Australia. They registered the trade mark in Australia. They waited a couple of years and then they wrote this nasty letter to our client saying, “You’re in breach of our trademark.” Our client had been trading in Australia before they started trading in Australia.

There are a whole lot of legal, technical arguments involved. We could’ve gone to court. We could have argued prior use and all sorts of things, but court proceedings take time and cost money. So the prospect of our client going to court was just not attractive. We were looking at maybe three years, $150,000 and no guarantee of a favourable result. We would have a result one way or the other, but we couldn’t guarantee it would help our client.

Looking at the business and knowing that the revenue wasn’t in the trade mark, we spoke to the supplier in the UK. They were happy to re-brand or they were already in the process of re-branding some of their products. So they said, “Okay, what we’ll do is we will assist you in re-branding.” They registered a domain name with the new brand. They registered the new brand as a trade mark here in Australia. Our client put together a 90 day plan, or at least we helped our client put together a 90 day plan to re-brand their business and to shift everything across to the new brand.

Because it was a 90 day plan and we made some promises to the American company about the process we were going to go through, they gave us that time because 90 days is a hell of a lot better than going through court, and there are certain requirements and rules around proper negotiation and all that sort of thing and trying to reach a commercial resolution. So the American company just had to wait.

Is there a better strategy?

In that 90 days, our client shifted his entire business onto the new brand. Now the value was in his database, so through a series of communications with the database, the whole database was shifted across to the new brand.

Our client did have to spend money on re-branding and shifting that database across, but he didn’t lose any revenue and most importantly didn’t lose any business. So once that process was complete, our client had a new website up. He had the entire database marketing to them and was changing them over to the new brand. We’ve got an agreement with the American company to say that we could sell out the end of the branded supply and not stock any new supply with that trade mark.

In the end, the American company bought our client’s domain name. Now, the reason behind that was the domain name was .com which means it can be used internationally, so my client still had the right to use that domain name in jurisdictions other than where there was a registered trade mark, or where he had permission. So he could still use it in the UK where they had the mark registered or his supplier had the registered trade mark and was happy for him to use it. In order for the American company to get hold of that domain, they had to buy it.

Instead of three years and $150,000 in court with no certain result, what we did is introduced a strategy enabling our client to re-brand in 90 days, shift his business across, not lose any money, and because the domain name was bought, his legal fees were effectively halved. So great, great result for the client, and just a really good example of the fact that there are options. Our client walked away with a stronger business and a protected brand.

  • Don’t think just because you get a letter of demand that you have no choice but to go to court.
  • Don’t think that you might not have an argument because there’s a whole lot of technical issues involved in legal cases, and sometimes it’s not all against you and sometimes there’s not all in your favour.
  • There are options and it’s worth investigating what those options are before you go and get started. 

How can Onyx Legal help you?

We’re interested in strategies that support you and your business to grow and get stronger. If you receive a nasty letter of demand and want help in figuring out how to respond, contact us to help you map the way forward.

Get your contracts checked by a lawyer!

Get your contracts checked by a lawyer!

Get your contracts checked by a lawyer!

Why getting a contract checked by a lawyer can save you thousands!

Today I wanted to share a quick thing with you about checking your contracts.

We’ve got a client selling an aspect of their business. They’re selling it for $230,000. So what they’re selling is not their company, they’re selling the assets of the company. Now, they came to us and said, “Is this something I should get checked by a lawyer?”

Well, it’s worth $230,000 to you. Do you want to keep that money? Do you want to protect it? Do you want to make sure the transaction goes through and you get the money? It’s going to cost them around $1,500 to get us to review the contract, check that it’s all right, suggest changes, highlight risks and protect their interests.

Do you reckon that’s worth $230,000? 

How can Onyx Legal help you?

For any agreement you want to go into that involves more money than you can afford to lose, contact us so we can prepare or run through the contract for you to help you to protect your interests and hang on to your hard earned money.

How to set up effective ‘terms of service’

How to set up effective ‘terms of service’

How to set up effective ‘terms of service’

 betteDo you have terms of service that help you manage client work?

One of the topics that came up at an Angel Investor and Entrepreneur breakfastwas terms of service.

One of the people I was speaking to is in the website and marketing design and development space, and the challenge that they’ve got is clients who don’t give them material they’ve asked for, like images or written content.

The problem is they have no service contract that says “if you don’t give us material in 7 days, then we can continue as if there’s no changes or we can go on and get the work done“.

The challenge for the designer is that they have a workflow they’re trying to work with and a work stream and they have staff allocated to certain projects and if you can’t move forward in a project, it messes up the whole business. You end up with staff who have nothing to do and other staff who are overwhelmed because clients simply don’t respond with the required information.

One of the things you can use terms of service for is to manage the relationship with your clients and to get them to give you information that you need from them in order for you to complete the work you need to get the job done.

You might like to do business with a handshake, but written contracts aren’t a bad thing. The reason you put them in writing is to better manage expectations and manage relationships. 

How can Onyx Legal help you?

If you would like to have a service agreement or terms of service prepared to fit your business, in a way that supports how you would like to run your buisness, let us help you. We usually start by requesting a copy of your typical work proposal and any details of any issues you’ve had in the past that you’d like to avoid in the future.  

How to Deal with Unfair Contract Terms

How to Deal with Unfair Contract Terms

How to Deal with Unfair Contract Terms

Rules Against Unfair Contract Terms Apply to B2B Transactions

As you can see, I’m on the road today visiting some clients and business meetings, and that is a plane I can hear in the background.

One thing I wanted to talk to you about today is we’ve got a client who has been involved in a business-to-business relationship. The relationship started early in 2017, so after the changes to Australian Consumer Law in November 2016, and some of the provisions in the contract that our client has entered into are unfair contract terms.

Under Australian Consumer Law, unfair contract terms are terms that, for example, will give one party the right to do something but not the other party. So for example, only one party being able to end the agreement.

In this particular instance, our client was signed up to do a certain thing for a certain period of time. The other party didn’t deliver, so they cancelled and they exited. But the person they signed up with is still trying to charge them money. It’s just not going to be enforceable under the changes to Australian Consumer Law, unfair business terms because it matches all the indicators that would enable the court to determine the provision void and unenforceable. As a business owner, you should be aware that unfair contract terms now apply in business-to-business transactions involving small business. 

How can Onyx Legal help you?

Contact us to review your contracts and bring them up to date for ease of understanding and legal compliance. If you worried that your contracts include unfair terms that affect you, or affect your customers, we can let you know your available options. 

Is the Law Black and White?

Is the Law Black and White?

Is the Law Black and White?

No, the law is not black and white

I’m on the road today in between meetings and just thought I’d share something with you. I’ve heard again this morning that law is very black and white.

Actually, it’s not. If it was black and white we wouldn’t need lawyers, we wouldn’t need courts to argue over what something means.

There’s a joke going around that if you give a sentence to six lawyers and ask them to tell you what it means, you’ll get six different meanings. It’s true. So, don’t assume that law is black and white.

Yes, we try and get clear, concise decisions by putting together contracts, and agreements, and stuff like that, but if things weren’t subject to interpretation, we wouldn’t have courts and we wouldn’t have a whole bunch of lawyers that we do today. So, no, law is not black and white. It’s all shades of grey and it is subject to interpretation.

One thing I say to people is, if you’re going to get into a dispute, if you think court is the answer, you have never got better than a 50/50 chance of winning.

I’ve been involved in cases which we thought we were dead set going to win, and we’ve lost. I’ve been involved in cases where we just thought we were going to lose and we’ve won.

There’s so many things that it’s subject to on the day, or on the days of court, that you can’t predict what the decision is going to be. So don’t think law and courts are the only way, and you’re going to get justice or it’s going to turn out your way.

You can’t make those assumptions. You’ve got to look at the cost, and the time, and everything else involved. So, please keep that in mind. 

How can Onyx Legal help you?

If you’d like to resolve a dispute without having to go to court and need a hand with your negotiation, contact us to find out how we can best support you in getting to a result you can live with now, so that you can get on with business.