Perfecting Execution Clauses to Avoid Enforcement Disputes

Feb 2021

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On 28 January 2021 (“yesterday” at the time of writing), the two of us (Paul and Suraj) delivered a webinar on execution of deeds and documents, together with our friends at Thomson Reuters.  If you’ve found your way on to this page, you probably realise that both of us are dispute resolution lawyers. So why are two dispute resolution lawyers delivering webinars about execution of documents?  Well, the scary reality is that we’ve found that a lot of disputes are arising out of execution related issues (and of course, cause Thomson Reuters asked if we would be interested and we were only too happy to oblige!). So our take on execution clauses came with enforcement-tinted glasses.

Here is what we think companies and individuals should bear in mind when signing deeds and documents:

  1. Check which law applies. Frequently, laws other than the governing law of the contract need to be complied with as well to ensure proper execution. Comply with: the governing law, law of incorporation of the parties, law of the place of signing.
  2. Good execution blocks are enforcement shortcuts. Use them. A bad clause is not always fatal, but it is expensive to explain on enforcement (and sometimes, it can be fatal).
  3. If you – and more importantly – your counterparty have the option of using a seal, use it.  It’s harder for one party to scream “forgery” if a seal is used, when compared to a mere signature.
  4. It is good practice to always check the articles of association and board resolutions to confirm the authority of the signatory. Don’t just rely on business cards.
  5. Make it clear who each individual is signing on behalf of. If an individual represents multiple companies, separate signature blocks for each.
  6. A signature typically means you are bound by the entire contract.  If that’s not what you intend to do – don’t simply sign to say “acknowledged”. Instead, make it clear what the purpose of your signature is.
  7. Ensure amendments are in formal contracts as well.  Email / WhatsApp / WeChat amendments to an earlier formal contract are hard (and expensive) to rely on.
  8. Have a proper signature block even if the counterparty is an individual. A good signature block for an individual should include the individual’s name (as in his/her HKID card or passport).

A link to the video of our Webinar is here.  We go into a bit more detail in the video and speak about the Hong Kong Companies Ordinance (sections 127 and 128 in particular), the Conveyancing and Property Ordinance, as well as the Electronic Transactions Ordinance.

On a side note – we both must say – we are fans of Webinars!  We had 230 people in attendance and receive around 20 live questions and lots of emails after (although the attendance might have had something to do with the Thomson Reuters publicity and the 1 CPD point on offer).  In the post-Covid world, we think Webinars are here to stay!

 

 

 

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