Why Is It Important to Read and Understand a Document Before Signing It? Select All That Apply.
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The 4 things you should know before signing a legal certificate
- Published May nineteen, 2020
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Your signature is your official postage stamp. Whether you are signing a loan application to buy your first home, executing your volition, signing an employment contract, or simply confirming receipt of your post, y'all will probably sign your name thousands of times throughout your life. But signing a contract is an act that can have significant legal ramifications and is not something that should be done lightly or hastily. Here are four things to look for when signing a legal document.
What makes a contract valid?
Offer and credence
Offer and acceptance is what makes up the terms of a contract in that one political party presents something that they wish to exchange with some other party (the offer), and the other political party accepts that offer (acceptance). Information technology tin can be as uncomplicated every bit paying money in exchange for a service.ane
Consideration
Consideration ways the do good included in a contract.ii Basically there needs to exist quid pro quo.
Intention to exist legally bound
Intention means that the contract was created with the intention that the contract would bind the parties to the agreement and for the agreement to be legally enforceable and valid.iii
If all the above elements are satisfied, the contract will generally be considered valid and enforceable.
Signing, or executing, a contract is the equivalent of accepting an offer and evidences an intention to be legally spring.
For more information about the elements of a contract, see our Elements of a contract page.
How do I sign a contract?
Signing a contract might seem adequately straightforward; however, it is a procedure that should not be taken lightly. Where an agreement is in the form of a written contract, executing that written document by and large means that the parties to that agreement intend to be legally bound by its terms and conditions.
By signing it, the parties are essentially saying that they know and empathize those terms and conditions. One of, if not the well-nigh frequent causes for contract disputes is that people sign contracts without understanding them. Often, they do not read the terms of the understanding properly and therefore lack sufficient knowledge of what entering into that contract really entails.
Here are v things you should do earlier signing a contract:
- Read the contract properly;
- Make sure you understand all the terms of the contract and their legal implications;
- If necessary, seek legal advice about the contents of the contract;
- Ensure that y'all are really authorised to sign the contract; and
- If your signature needs to be witnessed, ensure a qualified witness is present when you sign the contract.
If yous are unsure about signing something, take the time to think about it. Never let yourself to be pressured or rushed into signing something that you have not properly read and might therefore not fully sympathize. Additionally, you should never sign something if you are concerned about your lack of capacity to sign. Y'all wouldn't drive a car while under the influence – and yous shouldn't sign a contract under similar circumstances either.
What are the dissimilar ways of signing a contract?
Physically
The most common way to sign a contract is to physically write your signature on the document.
Electronically
Recently, and with the advancement in technology, electronic signatures have become a popular alternative because it is frequently a much easier option to concrete execution, peculiarly where documents are exchanged electronically.
While electronically signing a document volition more often than not accept the same legal outcome as physically signing it, parties who engage in digital execution should be cautious about the potential for misuse. In the case of Williams Group Australia five Crocker [2016] NSWCA 265, a loan was advanced by Williams Group Australia in circumstances where information technology relied on the digital signature of Mr Crocker on the awarding. Mr Crocker'southward digital signature, however, had been practical to the loan document by some other party without Mr Crocker'south authority. Considering of this, Mr Crocker was not held liable for the loan.
Counterparts and execution by facsimile
Prior to digital execution, parties to a written contract still required a mechanism to overcome the fact that they were often not in the same concrete location, and that posting the contract back and along for everyone to execute simply was not applied.
To resolve this, many contracts incorporate a clause allowing execution by counterparts, which is where each party executes a separate copy of the contract and then exchanges it with the other party's executed document, oft via facsimile (fax) or, more recently, email. That copy (made up of the split up copies) would be deemed to constitute the original certificate.
Execution by a corporation
Corporations are independent legal entities, and execution of contracts by them must comply with section 127 of the Corporations Act 2001 (Cth). A visitor can sign either past affixing its common seal or by signature of its directors.
The almost common way for a company to sign a certificate is by its directors. If this happens, the certificate must be executed by either two directors, or a director and a company secretarial assistant, or, if the company has a sole managing director, past that director.
If a company signs by using its common seal, the signature must be witnessed either by ii directors, a director and a company secretarial assistant, or, if it has a sole manager, by that director.
The case of Knight Frank Australia Pty Ltd & Anor v Paley Properties Pty Ltd & Ors [2014] SASCFC 10, is an example of a $ane.v 1000000-dollar contract being incorrectly signed by a corporation. The company had 2 directors, a male parent and a son. One director executed the contract on behalf of the company and crossed out the words "sole director/sole secretary" on the execution clause. No steps were taken to obtain the signature of the other director in social club to comply with section 127 of the Corporations Human activity, and the courtroom held that no contract had, in fact, come into existence.
Witnessing
A contract volition often crave that the execution of the contract be witnessed. Information technology is best exercise for the execution of a person's signature to be witnessed past a tertiary party and for the execution clause of the certificate to include the witness's name and signature.
Some contracts will specifically require that the party witnessing the execution holds a sure qualification. In the example of documents to be lodged with the Section of Natural Resources, Mines and Free energy (e.1000. mortgages, transfer documents etc), execution past individuals must exist witnessed past either a lawyer (i.e. a solicitor or a barrister), a justice of the peace, or a commissioner of declarations.
For when you need aid
You should e'er seek legal advice if you are unsure about executing a contract, whether that advice be near the terms and conditions of the contract or simply whether you are executing the document correctly. You should likewise ensure that the other political party, or parties, to the contract have validly executed the contract as well to avoid a situation where you are acting on an unenforceable understanding to your own detriment.
Telephone call Gibbs Wright Litigation Lawyers today for a free and confidential initial consultation about your contract affair.
[1] Bramble Holdings Ltd 5 Bathurst City Council (2001) 53 NSWLR 153; Cole v Cottingham (1837) 173 ER 406; R 5 Clarke (1927) 40 CLR 227.
[2] Australian Woollen Mills Pty Ltd 5 The Commonwealth [1954] HCA 20; Woolworths Ltd v Kelly (1991) 22 NSWLR 189.
[3] Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235; Ermogenous v Greek Orthodox Customs of SA Inc [2002] HCA eight.
The content of this publication is intended equally general commentary only and may not be suitable or applicable to your personal circumstances. It is not intended to replace independent legal communication. You can contact u.s.a. at our Brisbane Office for a gratis consultation on a range of litigation matters on (07) 3088 6364.
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