For businesses running paperless offices, remote contracting will be a relatively familiar concept. For many others, and for countless individuals across the country, contracting under current circumstances will be unfamiliar territory.
Printing or scanning facilities may now be inaccessible. Social distancing and ‘stay in your bubble’ policies will impact how documents are witnessed.
Thankfully, there are ways in which agreements can be entered into without the need for physical copies or face-to-face interaction.
In this article we take a quick look at how you can enter into a contract remotely.
Unless there’s a legal, or other, reason for a contract to be in writing (e.g. if it’s a deed, if it involves the sale of land etc), a verbal form of that contract will be enforceable against the parties.
The risk with verbal contracts, though, will always be the difficulty in establishing, with any real certainty, the parties’ intention to be legally bound and what the terms of the contract are. This is why it’s prudent for contracting parties to enter into, and sign, a written contract.
In general terms, if a contract must be in writing and signed, the contract will be enforceable if it’s signed with an electronic signature.
The most common ways in which an electronic signature is applied to a contract includes:
(1) The ‘sign and scan’ approach: This is where parties print the contract, sign in ink and then exchange signed, scanned copies by way of email.
(2) The ‘digital signature’ approach: This is where parties apply a ‘digital’ signature to a contract (e.g. through DocuSign, RightSignature, Secured Signing, HelloSign, PDF or other e-signing software).
Other forms of electronic signature, that are recognised by New Zealand law, include a party’s email sign-off, a signature that has been electronically pasted into a contract, the ‘tick’ applied to an ‘I agree’ check-box and a hand-written signature applied to an electronic device.
Contracting parties take note – if you intend to apply an electronic signature to your contract, the following strict legal requirements must be met:
At the time of writing there are certain documents which still cannot be signed or witnessed electronically.
These documents tend to be sensitive and solemn in nature with subject matter likely to impact the parties to, or named in, the document.
Examples include wills, powers of attorney, affidavits, statutory declarations, bills of lading and notices required to be given to the public. (A full list is set out in Part 3, Schedule 5 of the Contract and Commercial Law Act.)
In light of current circumstances, the hope is that the Ministry of Justice and/or the New Zealand Law Society will issue guidance or grant lenience around the manner in which these documents can be signed remotely.
Strict signing formalities apply to deeds. They must be in writing and signed in the presence of a witness who cannot be a party to the deed. (One common exception is if a company has at least two directors, in which case two directors can sign in the absence of a witness.)
Under current circumstances, video-conferencing technology (e.g. Zoom, Teams, Skype etc) – in which a witness can actually observe the Signatory sign a document – seems to provide the most logical and practical means of having a document witnessed.
In terms of the witness him or herself signing a deed remotely, the requirements for electronic signatures (and rules around which documents cannot be signed electronically), outlined above, also apply in relation to the witness’s electronic signature.
At the time of writing, we are not aware of the audio-visual approach to witnessing outlined above having come before a court, let alone be ruled upon. However, if asked to do so, our view is that the courts would likely adopt a pragmatic view and acknowledge the parties’ attempts to make the most of a highly restrictive situation with the facilities at their disposal.
If you intend to apply an electronic signature to your contract, you may want to consider the following additional, practical steps:
We recommend you seek specialist legal advice, as soon as possible, in relation to how you can enter into a contract remotely.
The above overview has been provided for general information purposes only. It is not, nor is it intended to be treated as, legal advice, or an exhaustive list of considerations for parties looking to enter into contracts remotely, and is subject to change without notice.