Electronic Signing of Contracts

Part 4 of the Contracts and Commercial Law Act 2017 ("CCLA") provides that, with some few exceptions, where a signature is required by law (including to conclude a contract) you can sign that document electronically provided certain conditions are met.  An electronic signature is defined in the CCLA as a method used to identify a person and to indicate that person's approval of that information.

In respect of a contract, this means you might be found to have agreed to a contract by:

1. Having the ability to review terms and clicking a tick box saying you agree to them before making a purchase order.
2. By sending documents with electronic signatures or scanning a signed copy of a document electronically.
3. By signing a digital screen – or even affixing a thumb print to a digital device.
4. By exchanging emails – particularly if they contain digital signatures.

Likewise, if a document requires a witness, that witness can also witness in a similar fashion.

The usual requirements of contract law will still be applied (such as intention to form the contract, certainty, offer, acceptance and consideration).  

Whether an electronic signature is binding or not will come down to a matter of evidence as to what the parties intended.  The CCLA provides that consent to be bound by an electronic process can be implied by conduct, so arguments can arise over whether the parties agreed to form and be bound by an agreement that is signed or agreed to electronically.  This means some caution is needed when you do not intend to be bound by an electronic communication – equally, you need to use caution to ensure that the other party cannot argue they are not bound if you intend to rely on electronic agreement.  The best way to ensure an electronic contract is binding is for the parties to very clearly agree a process of electronic signing that, when exchanged, will be binding upon them.  The best way not to be bound is to expressly state you are not bound until certain events occur or a certain process is followed.

We can assist you to ensure that your electronic contracts are binding and enforceable, so if you need assistance in this area please contact:

For any enquiries contact:

Andrew Knight on (021) 729 470 (aknight@mcveaghfleming.co.nz)

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