Education institutions: Executing deeds and commercial documents
It is imperative for education institutions to have policies and procedures stipulating who can execute commercial documents. If such guidance is not in place, this could lead to staff entering into binding agreements that ultimately put the institution at risk to perform obligations that are not achievable, and/or leave the institution liable for uncapped liability.
In the recent case of Signature Living Hotel Ltd –v- Sulyok ( EWHC 257 (Ch)) the High Court recently had to decide on the enforceability of two deeds of guarantee. As they were drafted as deeds they should have been executed and attested by a witness – but in this instance, they were not. The court ruled that the deeds were enforceable, despite not being executed correctly.
Things to consider when executing deeds and documents
It is important to avoid arguments like this that can cost both time and money. Therefore, it is of paramount importance that any member of staff who may be asked to sign agreements understands the consequences for the institution and has the requisite authority to sign such agreements.
A policy on who has authorisation to sign off on agreements should take into consideration things such as:
- the value of the contract
- the risk for the institution
- the length of the contract
- the obligations under the agreement; and
- the format of the document – is it drafted as a deed?
Can deeds and documents be signed using e-signatures?
Under English law, a contract executed using an electronic signature (and which may exist solely in electronic form), is capable of satisfying the statutory requirement to be in writing and/or signed. Whilst this makes it administratively easier for documents to comply with the requirements for execution, it also poses the risk of documents being readily signed without being reviewed.
Therefore, it is essential for institutions to have a clear policy in place to prevent issues and complications from occurring.
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