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
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.
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.
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.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Peter Sise explores how your contractual clause for recovery of legal costs might not do what you think it does.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).