Key Points:
Ignoring the formalities can mean that the document that took many months to negotiate or is worth many millions of dollars has no certain legal effect.
They're the backbone of energy and resources transactions, but the mechanics of properly executing a legal document are often overlooked as "mere formalities". However, a failure to adhere to these so-called formalities can mean that the document that took many months to negotiate or is worth many millions of dollars has no certain legal effect.
Correct legal entities
The document must correctly record the names of the legal entities to the document, whether they are individuals or companies. For example, a business name is not a separate legal entity.
Company execution
The preferred method of execution for a company will be signatures from two directors or a director and a company secretary. In the case of a sole director / sole company secretary the signature of the sole director / secretary accompanied by certain phrasing that clarifies their position is necessary. These methods of execution are preferred for company execution as they import assumptions from the Corporations Act that the document has been duly executed and no further evidence is needed.
It is permissible for a company to execute through an attorney or agent in which case evidence of the valid appointment of the attorney or agent will be needed.
It is also possible for a single director to execute on behalf of a company, however written evidence of the authority given by the company (eg. a resolution) is necessary.
Date
In most cases, the date that the document is to commence will be by reference to the date of execution (whether it be the actual date of execution, or a set period of time before or after). Therefore, it is critical that the last party to sign the document inserts the date of signing.
Witnesses
Unless a document has some specific legal requirements (eg. wills, land titles documents), the signature of an individual can be witnessed by any individual, and a commissioner of declarations (lawyer or Justice of the Peace) is not needed. However, to "witness" someone's signature you must actually watch them sign it. It will be ineffective to "witness" before or after someone has signed.
Amendments
If handwritten amendments are to be made to a document on execution they must be initialled by all parties and must be consistent throughout any counterparts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
