When There is a Will, There is a Way… to Execute It Correctly (and signing it electronically is not one of them).
In Aotearoa, the law on formation and enforceability of contracts does not generally distinguish between the traditional paper and pen contracts, and the modern electronic contracts.
Electronic signatures are a legal and practical way to sign documents. They are particularly helpful for property transactions and have made processes smoother for everyone involved. By understanding their benefits and being aware of their limitations, businesses and individuals can confidently use electronic signatures in their day-to-day dealings.
Can I sign a Contract electronically?
Electronic signatures are generally permitted provided they meet reliability and consent standards. Remote witnessing must still satisfy legal requirements that the witness be physically present (albeit virtually) when the deed is signed. It is also best practice to record the witnessing process (with consent) and keep detailed records to demonstrate compliance, just in case the deed’s validity is later challenged.
When using a video call or similar means to sign a contract electronically, the witness must be able to see:
- the document;
- the person signing the document; and
- then watch that person sign the document.
What Contracts or Documents can I sign electronically?
The general position under law is that electronic signatures can be used and will be considered just as valid as written signatures as long as requirements are met, being that the electronic signature:
- Is of a person that is not a party to the deed;
- Adequately identifies the witness and indicates that the signature or seal has been witnessed;
- Is as reliable as is appropriate given the purpose for which, and the circumstances in which, the witness’s signature is required; and
- All parties to the document consent to the use of electronic signatures.
The following documents can be signed electronically:
- Agreements for Sale and Purchase of Real Estate;
- Commercial agreements;
- Leasing documentation;
- Director resolutions;
- Shareholder resolutions; and
- Trustee Resolutions.
What Contracts or Documents can I not sign electronically?
Electronic signatures cannot be used for all transactions. Some exceptions include documents given on oath or affirmation, powers of attorney or enduring powers of attorney and wills and other testamentary instruments. An electronic signature can also not be used when the recipient has not given their consent to be able to sign electronically.
The following are examples of documents and contracts that cannot be electronically signed:
- Wills, codicils or other testamentary instruments;
- Affidavits;
- Statutory Declarations;
- Other documents that are given on oath or affirmation;
- Powers of Attorney and Enduring Powers of Attorney; and
- Information that is required to be given in writing in person, unless the receiving the electronic signatures consents.
Temporary COVID-19 laws allowing for remote/video witnessing of wills have since expired, meaning you cannot legally witness a will electronically in NZ as of today. The law requires the will-maker and two witnesses to be physically present in the same room to sign in "wet ink”.
Can I sign a Deed electronically?
Deeds can be signed electronically, but there are important points to consider in terms of formalities. For New Zealand companies, a deed must normally be signed by two directors or, if there is only one director, by that director in the presence of a witness.
In the case of two directors, each director can sign in counterparts using electronic, wet ink signatures or a combination of both. However, if a sole director is signing in the presence of a witness, the witness must observe the director’s signature first before signing themselves (electronically or by wet ink).
Can I sign a Separation Agreement or Contracting Out Agreement electronically?
The Property (Relationships) Act 1976 requires signatures on contracting out and separation agreements (known as a ‘pre-nup’ and a ‘post-nup’) be witnessed by a lawyer in order to be valid. To date, the law has not been tested as to whether this requires the signature to be witnessed in person. Given the importance of these agreements, specific clauses are put in these agreements if people are wanting to sign electronically. Electronic signing of these agreements is normally only done if it is really not practicable for someone to attend in person to sign physically.
How can I make the most of signing documents electronically?
To use electronic signatures effectively:
- Make sure all parties agree to use electronic signatures beforehand;
- Verify the identity of signers when needed, especially for important documents;
- Retain evidence, such as digital signing logs;
- Choose reliable digital signing software or platforms, such as:
- Digisign;
- DocuSign; and
- The Law Association’s WebForms.
Failure to verify the identity of a person purporting to enter into or execute an e-contract will have similar consequences as failure to verify the identity of a written signature, that is, exposure to the risk of identity fraud or the relevant signatory lacking the necessary authority.
What happens if I do not witness an electronic signature correctly?
Be aware that documents that have been signed electronically may be requisitioned if they:
- Have signatures that appear to have been cut and pasted, or created using a touch screen; and
- Didn’t capture authentication, time and source details at the time of applying an electronic signature (when using a software).
How can I avoid the stress of navigating the law myself?
Get in touch with Godfreys Law today for all your deed, contract, and document executing needs. From the drafting of the document to the final signature, we can walk you through every step of the way – whether this is in person, or where possible, electronically.
Real People. Real Solutions.
