Ensuring Corporate Documents’ Enforceability – What to Know

Ensuring Corporate Documents' Enforceability - What to Know

27/04/2021

In all its official contracts and deals, a company needs to ensure it has legally binding documents. Improper execution—that is, non-legally binding documents—could open it up to assertions that the agreement is unenforceable. Companies can execute documents following their Constitution or governing documents or the Corporations Act 2001 (Cth) (the Act).

Companies can also resolve to authorise documents through alternative means; their directors decide on such resolutions. Alternative means could include executions by corporate lawyers, appointed agents, or other authorised representatives. Company resolutions must include the identity of the appointed person, the duration of the appointment, and the representative’s capacities and responsibilities during the appointment.

Appointing Legal Representatives for Executing Documents

If a company wants to appoint a lawyer to execute documents, they should do so under the provisions in relevant legislation. In cases where the company chooses a non-lawyer, a solicitor needs to set out the terms of the appointment and specify when the lawyer’s powers come into effect.

Signing land documents in Queensland have additional stipulations. First, the company’s power of attorney needs registration with the Queensland Land Registry, and the corporate lawyer’s execution needs to include the signing clause. During the signing of the document, the other party to a document signed by an authorised representative must request proof of the person’s authority to sign on behalf of the company.

How a Company Can Execute Documents in Queensland

Section 127 of the Act sets out the ways companies can execute documents. Companies that execute a document following stipulations in s 127 can rely on the Act’s protection for dealings related to the company. In this section, companies can execute documents with or without using a seal. If a company has a seal, it is not obliged to use it for executing documents.

Section 129 of the Act includes several assumptions third parties can rely upon where representatives execute documents on behalf of companies.

First, and according to section 129(5) of the Act, a party may assume that the company they are entering an agreement with has appropriately executed the document. They can assume that two of the company’s directors have signed the document. In the absence of two directors, they can count on the director and a secretary of the company or the director and relevant officers.

Next, and under section 129(6) of the Act, the other party may assume proper execution of the document if it has the company’s common seal. There should also be proof that relevant parties witnessed this affixation. Two directors, a director and a secretary, or the sole director of the company and relevant officers, are all persons who can adequately witness the seal. When a company has signed a document, execution on behalf of the company need not be witnessed.

Conclusion

Executing legal documents requires adherence to the company’s Constitution or the Corporations Act (2001). Note that some State and Federal government departments impose additional formalities for compliance. If you are not sure what the requirements are in your area, it is best to consult a corporate lawyer.
For document execution and consultations, contact GLG Legal today. We are Brisbane corporate lawyers assisting businesses in various aspects of commercial law, including agreements, acquisitions, purchases, succession planning, and more. Contact us today for enquiries.

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