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Executing documents in a pandemic

15 July 20 - In the News

Authors: Holding Redlich partner Scott Alden & associate Victoria Gordon
Publication: Sourceable
Publication date: 15 July 2020

The COVID-19 pandemic has disrupted multiple facets of society.

One hurdle businesses have had to deal with is executing documents when the signatories are working remotely or constricted by social distancing laws.

In the construction industry, this has included executing tender submissions, construction contracts and subcontracts, deeds of release and statutory declarations.

Below are the different ways documents can be executed remotely, including the temporary regulations that have been enacted in various states to facilitate the electronic signing of documents during COVID19.

Simple contracts

Generally, simple contracts can be electronically executed without the COVID-19 regulations.

For a simple contract, which most standard construction contracts are, contracts can be signed electronically by parties, depending on whether the contract is being signed in an individual capacity or on behalf of a company.

Individuals: Where a contract is being signed by an individual, contracts can be signed with a personal electronic signature without the need for a ‘wet ink’ signature or witness.

Companies: At general law, a simple contract can be in electronic form and executed electronically.

However, the law regarding electronic signatures under s 127 of the Corporations Act remains unsettled. If the document is an agreement, electronic execution under s 127 may still be valid at common law, but the counterparty is not able to rely on the statutory assurance of the validity of its execution.

In all cases, parties will need to be able to demonstrate that there was a clear intention to be bound by the contract, and that the signatory had the requisite authority to sign the contract.

Deeds

At common law, a deed must be:

  1. written on paper, parchment or vellum;
  2. signed;
  3. sealed (this includes being witnessed, or ‘attested’); and
  4. delivered.

The rules relating to the valid execution of deeds vary between Australian jurisdictions and depend on whether the party that is executing the deed is an individual or a company.

Recent legislative changes in NSW have expressly permitted deeds made by natural persons in electronic form with electronic signatures and attestation (Conveyancing Act 1919 (NSW) s 38A).

However, a witness must be physically present and must sign the same document at the same time as the signatory.

The common law requirement for paper, parchment or vellum remains in most other Australian jurisdictions.

In some states, this has been modified by the COVID-19 temporary regulations, as set out below.

COVID-19 temporary regulations

NSW: Under the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 witnessing can validly occur remotely (albeit temporarily) via an audio-visual link (such as Zoom or Skype), provided the witness:

  • sees the signatory actually sign the document in real time
  • attests the signature was witnessed by signing the document or a copy
  • is reasonably satisfied that the document the witness signs is the actual document or a copy of it
  • endorses the document with a statement stating the method used to witness the signature, and that the document was witnessed in accordance with the NSW COVID Regulation.

However, this does not address the uncertainties of a company executing a deed electronically under s 127 of the Corporations Act.

Victoria: The new temporary regulations under the COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020 similarly permit deeds to be signed electronically and include remote witnessing provisions.

Queensland: The Justice Legislation (COVID-19 Emergency Response—Wills and Enduring Documents) Regulation 2020 (as amended) have introduced new rules in Queensland which allow the electronic signing of deeds, and certain other enduring documents, and the witnessing of certain documents by way of audio-visual link.

Conclusion
The rules around electronic signing of documents in Australia remains fragmented and uncertain in many jurisdictions. Whilst some temporary measures have been introduced to allow parties to more easily transact during COVID-19, uniform reform is now needed more than ever to facilitate the electronic execution of documents.

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