VIC Executing Documents - scanned signed contracts

[DuginOZ]

When signing up a client in our business we use the following process:
1) Email copy of agreement (deed) to client (usually a company)
2) Client prints document and signs the execution page (assume this is correct)
3) Client scans complete document and emails it back

At this point we need to countersign and date the deed.

A) Do we need to print the entire document or can we just print the execution page?
B) If we print the execution page only, can we then scan that now complete execution page and join it to the remainder of the document to create an electronic copy of the complete agreement with fully signed execution page?

Further - if the client mails us the hard copy with the wet signature on it, what is the status of that document? We cannot sign it and backdate so do we just file it as further evidence of intention to enter an agreement (if somehow the electronic version was disputed as valid)?

I would be interested in any reasoning as well.

 

[Tim W]

When signing up a client in our business we use the following process:
1) Email copy of agreement (deed) to client (usually a company)
2) Client prints document and signs the execution page (assume this is correct)
3) Client scans complete document and emails it back

At this point we need to countersign and date the deed.

A) Do we need to print the entire document or can we just print the execution page?
B) If we print the execution page only, can we then scan that now complete execution page and join it to the remainder of the document to create an electronic copy of the complete agreement with fully signed execution page?

Further - if the client mails us the hard copy with the wet signature on it, what is the status of that document? We cannot sign it and backdate so do we just file it as further evidence of intention to enter an agreement (if somehow the electronic version was disputed as valid)?

I would be interested in any reasoning as well.

You're heading says "contract", yet your post talks about deeds.

Whatever you're doing, you're doing it fast and loose, and slack and lazy,
and potentially invalidating the document.
You're putting more effort into getting out of a bit of work
than it would take to just do that work.

Severing one bit of a document and attaching it to something else?
Not a course of action I would ever recommend.

Pro tip (i) : Deal in whole documents only.
Pro tip (ii) : If the client sends you a hard copy with a wet sig, then use that.

 

[DuginOZ]

Thanks for your response Tim.

You're heading says "contract", yet your post talks about deeds.

Apologies - that was an ambiguous. The agreement in this case is actually a deed that is a legally binding contract (ie: it states "This deed is a legally binding contract between...")

Whatever you're doing, you're doing it fast and loose, and slack and lazy,
and potentially invalidating the document.

We are trying to be fast, but definitely not loose, slack or lazy. Hence my questions here. Various people within a franchise network of similar businesses do different things and I am trying to find out what processes are valid or not.

From a legally curious point of view - I just want to check whether only printing the execution page of a document (that had been signed by one party) and then counter signing it would constitute a valid agreement.

I take your point about whole documents. To be totally sure we probably should have each page initialled too, however my understanding is that we were advised this practice was not needed.

The main thing for our businesses is we need to be able respond to clients quickly. Once they have signed our agreement, we want to countersign and be able to provide our service asap, hence we (and the client) do not want to wait days for the wet sig by snail mail. This is why we print the copy that was emailed to us and countersign it.

Our franchisor has advised we get the wet sig sent to us, however if we act on the emailed copy (and countersigned a version of that) I am unclear what we are meant to do with the original once we have received it.

 

[Rob Legat - SBPL]

First, it appears you don't understand what it is you're actually doing because of this sentence: "The agreement in this case is actually a deed that is a legally binding contract". A deed is not an agreement - it is a deed. An agreement can be a contract. A deed is a special form of 'contract', but it is a very special 'animal' and should be considered separately to what the lay person generally considers to be a contract.

I suggest you read this page: Aren't they just contracts? The difference between deeds and agreements - Knowledge - Clayton Utz

The fact that the document you are referring to states "This deed is a legally binding contract..." gives me an indication it may have some problems in it. Deeds have very particular uses, you don't just trot them out when you want to sound fancy. A properly executed deed is binding in and of itself, and is often used when there is an obligation taken on which is not supported by valuable (or direct) consideration. An example would be a guarantee under a loan by a third party.

If nothing else, I suggest you generally follow your franchisor's directions explicitly. That way you're not in trouble for breaching their franchise system, and you have some slight protection if something goes wrong with their system by at least having an avenue to take legal action against the franchisor/join them as a party (if you don't follow their system, they will likely disclaim responsibility).

 

[DuginOZ]

First, it appears you don't understand what it is you're actually doing because of this sentence: "The agreement in this case is actually a deed that is a legally binding contract". A deed is not an agreement - it is a deed.

Thanks Rob. Yes, I am a lay person, but I do understand what I am doing in my business (but thanks for the concern), and when I am unclear I ask questions. That is exactly what I was attempting to do.

I humbly apologise for using the term "agreement". I meant it in a broad sense (the client agrees to do things, we agree to do things - although there may be ambiguity as to whether we are providing good consideration and this is presumably why the experienced banking/finance lawyer opted for use of a deed in the first place).

There is actually a potential argument that a deed is a "type of agreement", albeit one that does not have to have the other elements of a standard contract to be legally binding, but does have other formalities;

From Taylor Wessing UK: There are two forms of written agreement under English law: simple contracts (written "under hand") and deeds.
https://united-kingdom.taylorwessing.com/synapse/commercial_execution.html (I realise this article is from a different jurisdiction but given the origins of law (and language) in Australia I think it is valid)​

I admit that for the sake of clarity I should have used "document" in place of "agreement" in all of my posts, as in, The document in this case is actually a deed that is a legally binding contract. However I might have been technically correct.

It is ironic that this mistake was made while simply trying to address Tim's issue of me using the term "contract" and "deed" in the same post, which he took exception to. So let's address that too as you have raised the same with the following issue:

The fact that the document you are referring to states "This deed is a legally binding contract..." gives me an indication it may have some problems in it.

This should not give you any indication of the document having problems in it. I have seen this in other deeds and these very documents have been tested in court and used for appointment of receivers, etc. I do not believe that the statement commencing the deed either invalidates the deed or gives any indication of problems.

Are you saying that deed cannot be a legally binding contract?

My understanding (as a lay person) is broadly that:

• there are agreements (meeting of minds, eg: lets agree to meet for coffee at 10, or I'll give $100 and you give me a bottle of wine)
  • Some agreements are legally enforceable. These agreements are contracts (they must meet certain elements or have special requirements. The four most often referred to elements are agreement, intention, consideration, capacity. )
    • Some contracts are written, examples are simple written contracts ("under hand") and deeds
      • Deeds are a special type of written contract with special requirements (or formalities) and do not require the element of consideration

Perhaps best summed up by:

"Many agreements are made by deed. Such agreements have the peculiar characteristics of a deed and, subject to those characteristics, are governed by the general law of contracts" (Ken Aitken, Deeds and Agreements January 1998, Law Institute Journal, http://www.austlii.edu.au/au/journals/LawIJV/1998/11.pdf)​

Or in more detail:

"A contract is formed when one party (the promisor) makes a promise which the law will enforce because certain conditions have been met. The party to whom the promise is made is called a promisee.3 When parties enter into a contract, they do not necessarily have to reduce their agreement to writing. However, sometimes (either by choice or by necessity) the terms are reduced to writing and signed (“executed”) by the parties. The writing can be in many forms. The two broad categories which are relevant to the issues considered in this Report are deeds and simple written contracts..." (New South Wales Law Reform Commission, Report 97 The rule in Pigot’s Case January 2001, https://www.lawreform.justice.nsw.gov.au/Documents/Publications/Reports/Report-97.pdf) - this is a great read if you want to refresh on Pigot's Case.​

Therefore, while not all agreements are contracts enforceable by law, and not all contracts are in writing, and not all written contracts are deeds, I do think it is fair to classify a deed as a written contract, which is a legally enforceable agreement and therefore an "agreement" (at least in a general sense).

It is all very confusing for us lay people, especially when you lawyers have instruments like Deeds of Agreement (???), however I readily admit that in legal circles the term "Agreement" is used for a simple written contract (one that is not a deed), "A 'Contract' is also known as an 'Agreement'" (Jasmine Morris, Contracts and other forms of agreement, https://www.artslaw.com.au/art-law/entry/contracts-and-other-forms-of-agreement/ ).

Therefore I realise I was being loose, slack or lazy to not be more clear in my rushed posts. Again I apologise and throw myself at the mercy of the Court of Legal Forums. I was wrong not to be clearer.

To avoid any ambiguity, the document I am referring to is a DEED. It is executed with the introductory wording: "Executed as a deed on...", and all natural persons signing do so under the wording: "signed, sealed and delivered" and need to be witnessed.

You also state:

If nothing else, I suggest you generally follow your franchisor's directions explicitly.

You have no idea how funny that is. It is precisely because the franchisor does not have clear, explicit directions that made me to ask my original question.

I was (naively) trying to understand the intricacies of deed execution when electronic transmission and electronic copy documents are involved (as occurs a lot these days) and initiate a discussion about that. Hence I asked my original (badly worded question). Unfortunately we got stuck on my wording (my bad).

​

I was interested in a discussion around the common issues in a modern, hectic, email enabled, post facsimile world for businesses entering into agreements (often in the form of a deed) with each other.

Some other points of interest (or not):
In Tim Worden's excellent article (The execution of documents – getting it right) he states: "In short, the safest course for both simple contracts and deeds is for the parties to exchange by email pdf copies of executed signature pages together with – in the same email - a Word or pdf version of the whole agreement that has been executed."

In the article that TimW from here referred to by Clayton Utz it mentioned that deed is binding on a party when it has been signed, sealed and delivered to the other parties, even if the other parties have not yet executed the deed document: Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609 at 619 per Lord Denning. This seems to indicate that we do not even need to counter sign.

In a quick guide from law firm Squire Patton Boggs has an interesting distinction between executing deeds in counterpart compared to executing electronic copies - https://www.squirepattonboggs.com/~...d/how-to-execute-a-deed-quick-guide.pdf?la=en

Anyway thank you for your input and sorry again for the confusion!

 

[Rob Legat - SBPL]

Are you saying that deed cannot be a legally binding contract?

No. You’ll note that my post does specifically state that a deed is a special form of contract. My point is that a properly constituted deed does not have to say it is a “legally binding contract”. A properly constituted deed is legally binding. In legal terms, it’s somewhat akin to saying, “This fish is a fish….”.

While I can’t speak for every lawyer, my understanding is that as a profession we don’t like to mince words. Precision isn’t just a hallmark, it avoids confusion; and confusion is the soil that disputes are rooted in. If it’s a deed, it’s a deed. Calling it a deed and a contract is not only redundant, it could eventuate in a claim that the document is not in fact a deed or was not intended by the parties to be a deed.

I’ve sat in open Court and seen experienced judges tell off experienced senior counsel for labelling a particular thing without establishing that it meets the criteria, and admonishing them not to use that label until it has been determined to be case that that label fits.

Now while you may have been technically correct, without establishing the context of your knowledge and the manner in which you were meaning and using the terms you’re going to get the response I gave. Rather than going into a detailed technical explanation of the legal concepts, its is much easier and safer to keep the terms apart. An agreement or a contract can be many things – a deed can only be a deed. Therefore there is safety in keeping the terms separate, and less likelihood of confusion.

As to my suggestion about following the franchisor’s instructions, I fully appreciate the irony of the statement. I’ve acted for a number of franchisees in disputes with their franchisors. The systems are not always good. However, and I cannot stress this enough, if you fail to follow the system you may be held in breach of the terms of your franchise agreement and that is when the ‘fun’ really starts. You do not want to step into that lightly because, almost as a rule, franchisors are very militant and protective of their systems – they have to be.

If you have a problem with what you franchisor is telling you to do, you seek legal advice and your franchisor’s specific written directions. You do these things to cover yourself.

In respect to when a deed is binding, it can depend on the nature of the deed’s contents. Proper execution and participation should be contingent on all relevant parties executing it. Otherwise, one party may end up bound expecting another party is as well, and finding out the other party isn’t because they didn’t execute.

 

[Tim W]

In the article that TimW from here referred to by Clayton Utz....

1 Is there a link in my post of which I am unaware?
I think you'll find that it was Rob who linked to that article.

2. Just to be clear - I am not Tim Worden.

 

[DuginOZ]

1 Is there a link in my post of which I am unaware?
I think you'll find that it was Rob who linked to that article.

2. Just to be clear - I am not Tim Worden.

1. It was Rob not you Tim (sorry I can't edit that post now?)

2. No suggestion you were but thanks for clarifying

 

[DuginOZ]

No. You’ll note that my post does specifically state that a deed is a special form of contract. My point is that a properly constituted deed does not have to say it is a “legally binding contract”. A properly constituted deed is legally binding. In legal terms, it’s somewhat akin to saying, “This fish is a fish….”.
.

In terms of the wording "This deed is a legally binding contract between...", these words are the beginning of an introduction that obviously continues. Perhaps it could have said, "This deed is a deed between...".

I cannot answer for the lawyer, but maybe it was a deliberate choice to be clear for clients that the document following was critical and important ("legally binding"). Rather than being akin to "This fish is a fish...", it is actually closer to saying "This tuna is a fish...". If someone doesn't know what a 'tuna' is, they have a better chance of knowing and having a general understanding of 'fish'.

As you say a deed is a very special animal, but there may be better chance that general public have a broad understanding of "legally binding contract".

The only reason I brought up the point that a 'deed' can be classified in the overall category of 'contract' was to originally was defend myself against Tim's accusation...

You're heading says "contract", yet your post talks about deeds.

Whatever you're doing, you're doing it fast and loose, and slack and lazy,

The reason for going into the discussion of the legal concepts was (a) to ensure I understood correctly that a deed was a contract which is an agreement (though an agreement is not necessarily a contract, and a contract is not necessarily a deed), and (b) to defend myself against Tim's and your accusation...

First, it appears you don't understand what it is you're actually doing because of this sentence: "The agreement in this case is actually a deed that is a legally binding contract".

I readily admit that my first post could have used words that did not cause confusion and I apologised. However as a first timer to this forum I felt a little under attack ('lazy', 'don't understand what it is you're actually doing') when the wording I used was not actually incorrect. If it was not sufficiently clear to enable an appropriate response to my question, then questions of clarification ('Are you referring to a simple contract or deed?') might have appeared to have been less aggressive.

Having said all that I appreciate the tips/advice that were also included in posts by both you and Tim W.

I was originally asking the question about execution of contracts involving electronic transmission and electronic documents (not a contract vs deed discussion). The world (and the law as I read it, but to what extent is up for debate) has moved on from 'paper, parchment and vellum', though not in all cases. It is the practicalities of that which I was enquiring about and I suspect would be of interest to business people who use legal agreements (in the broad sense) often.

I was using the example that involved a deed, although the question is just as valid for a simple contract (but if it is acceptable a deed it is probably so for a simple contract, not vice versa). I asked one permutation but there are many others and related questions about which I am curious, eg:
- What is the difference between a photocopy of a signed document, and a scanned PDF of a signed document?
- If a client prints the execution and signs and scans it, then sends an email attaching the signed execution page and the original deed - what is that status?
- Is there difference between printing 30 pages, signing and scanning 30 pages then emailing the document, rather than printing page 30 signing and scanning it, joining it to pages 1-29 (or even pages 1-30, duplicating p30) and then emailing it? The important note here is the final email from the signing party (or their agent), as it would difficult to argue the deed lacked integrity and was not the document that was originally signed.

There are many more.

Although I failed in starting a discussion regarding the topic due to my original rushed post, for the sake of others in the forum that might be interested in these sorts of practicalities and others relating to electronic documents and electronic execution, I include two very interesting reads. The first is a post discussing some of these issue and advocating a book, Seddon on Deeds written by Dr Nicholas Seddon. Both the article, and it would appear Seddon on Deeds, are advocates for 'paper, parchment and vellum':
Can a deed be made electronically? | Leading SMSF Law Firm

The second is a slightly longer read about , but much more detailed, and refutes many of Seddon's arguments:
Allens: Allens insights: The efficacy of e-signatures

Cheers.