Some more of our DocuSign dangers are:
1.Deeds can’t be signed through DocuSign for a number of reasons which to some extent differ State by State.
In QLD, Section 45 of the Property Law Act 1974 (Qld) requires a document to be signed and attested to by at least one witness not being a party to the document, which is currently not provided for in DocuSign. Further, when it does become possible, that method of witnessing would be untested by the Courts.
This means there is a need to be careful with commercial documents in the form of a Deed such as guarantees, incentives as these will not be validly executed and will not be enforceable if signed using DocuSign.
If it is necessary or desirable to use electronic signing, it is possible (with an appropriate amount of caution) to include these commercial matters within the terms of an agreement which has consideration (for example, a guarantee built into a contract), rather than in a standalone deed;
2. There are significant difficulties for a company executing documents through DocuSign.
While signing using DocuSign is not prohibited by the Corporations Act 2001 (Cth) (and therefore may be permitted by the Constitution of the company as a form of executing documents), presently, other parties cannot rely on assumptions in Section 129 Corporations Act 2001 (Cth) even where Section 127 Corporations Act 2001 (Cth) appears to have (or has) been complied with.
This occurs even if the parties express a direct intention to comply with Section 127 Corporations Act 2001 (Cth) in using DocuSign, as relevant sections of the Electronic Transactions Act 1999 (Cth) do not apply to the Corporations Act 2001 (Cth).
In our view it is best for corporations to execute documents without using electronic signatures as the possible ways around the current legislation are detailed and complex and are unlikely to be readily accepted or recognised by authorities or other organisations (let along by the Courts);
3. It may be difficult to determine whether the parties to the agreement had the requisite intention to be bound.
Again, identification of the parties is key – a party cannot intend to be bound if another party signs on its behalf. The upfront identification process is key to ensuring that there is enough evidence to support that the parties had the requisite intention to create binding legal relations.
In our view it is critical that each party signing in DocuSign is required to verify their identity prior to using DocuSign by providing a licence and passport, with their email address and mobile verified at the same time by sending a verification email and text during the VOI process.
This allows all parties involved in the transaction to be assured that the parties who are participating in a DocuSign process are who they are meant to be and are the persons who will actually have access to the email and mobile listed.
Further, to confirm these details once a contract is signed, a DocuSign certificate of completion must accompany the contract to verify the parties who signed the agreement and all details associated with signing (email, mobile, where, when, IP address etc.).
Failure to identify the parties properly leaves it open for one party to suggest they never signed the agreement at all. It is impossible to prove a party had the requisite intention to be bound if you cannot prove that party signed the agreement.
When adopting new technologies and embracing change, you can’t afford to neglect or trivialise the importance of the long-established pillars of contract (being offer & acceptance, consideration and intention to be bound).
Important Disclaimer: The material contained in this publication is of a general nature only and is based on the law as at the date of publication. It is not, nor is it intended to be, legal advice. If you wish to take any action based on the content of this publication, we recommend that you seek professional advice.