Living in the age of technology has its benefits, but
what happens when the convenience of technology gets us locked into
deals we didn't even know existed? While more and more
companies move towards electronic signatures we thought we'd
better let you know how to actually use them.
Section 127 of the Corporations Act (Cth) 2001 allows office
holders to sign documents by way of electronic signature —
well actually, rather than allow it, it doesn't
prohibit it. The question remains, how and when can we use
these electronic signatures?
In a recent case a director, Mr Crocker, uploaded his signature
onto an electronic signing system where someone else from the
company used his signature to sign a deed of guarantee and
indemnity. To Mr Crocker's surprise, instead of receiving baked
goods from his wife Betty he was hit with a lawsuit enforcing his
personal guarantee on a credit transaction he didn't even know
he was a party to. Thankfully, the courts found that because Mr
Crocker didn't give actual authority, he wouldn't be held
liable for the guarantee.
Authority is key here: where directors and secretaries are
uploading their signatures for convenience, it is crucial to
receive instructions each and every time their signatures are used.
In other words, a director merely uploading their signature and
giving you access to it does not mean their signature can be used
as a free-for-all. While it may be easy to just copy and paste a
fellow office holder's signature on the bottom of a letter or
back of an agreement, remember these signatures may mean next to
nothing without authority from their owner.
If you've already used another director's electronic
signature without first receiving authority, (don't panic just
yet ...) you can put that person on notice, which allows them to
either reject or ratify its use. And we don't mean dropping it
in over Friday night drinks. To put someone on notice and enable
ratification, that person will need to have seen, read and
understood the document before confirming his or her consent.
We do not disclaim anything about this article. We're
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Do not depart from the contract terms, or encourage the other party to do so, unless you plan to alter the contract.
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