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Contracts are the basis of any business relationship. They are legally enforceable agreements that outline the terms of a specific transaction or arrangement. Their legal enforceability means that parties can go to court if the other party to the contract does not uphold their responsibilities under it. During legal proceedings, the court can either enforce the agreement or order the breaching party to pay damages. However, contracts can be unenforceable if they do not meet all the requirements of a binding contract. This article will explain whether your contract needs a witness signature to be enforceable in New Zealand.

Witness Signature

A witness signature is where a third party acts as a witness to a contract and subsequently signs that they have witnessed it. Witness signatures allow third parties to verify that a contract has actually been signed and both parties intended for the contract to be binding.

Elements of a Binding Contract

For a contract to be legally enforceable, it must have several elements, namely:

  • a clear offer;
  • acceptance;
  • consideration;
  • an intention to be bound; and
  • certainty of terms.

Any contract that does not meet these requirements is not binding, and the court cannot enforce its terms. We explain these elements below.

Clear Offer

There must be a clear offer from one party to another. This can be in writing, or it can be oral. You must make sure that the other party clearly understands the offer. 

Unambiguous Acceptance

The party receiving the offer must accept it. Further, the accepting party must do so in the manner prescribed in the offer. Thus, if you accept an offer in a different way than how the offerer asked you to, the contract can be unenforceable. Likewise, if you receive an offer and decide to negotiate the terms, you are now sending the offer. This means the other party must unambiguously accept your offer.

Sufficient Consideration

Additionally, there must be sufficient consideration. Consideration is the benefit or thing of value that each party receives as part of a contract. Both parties must receive something under the contract otherwise, it is not beneficial for both parties. 

Intention to Be Binding

Both parties must also intend for the contract to be binding for it to be enforceable. That is, when both parties signed the contract, they knew that a court could hold up the agreement. This is an essential element as many people enter into agreements without realising that they are legally bound to their promises. 

Certainty of Terms

Finally, there must also be certainty of terms in the agreement. This means that both parties must fully understand what they are agreeing to do. This can be difficult for oral contracts as it is more challenging to prove what each party originally said and agreed to do. For written contracts, the terms in the agreement must be clear and unambiguous. A court may not uphold a clause in a contract that is equivocal.

Contracts Requiring a Witness Signature

Certain contracts in New Zealand need a witness signature for them to be enforceable. Likewise, these contracts are generally complex. The following documents require a witness signature:

  • wills;
  • affidavits;
  • statutory declarations;
  • agreements for the sale and purchase of real estate;
  • commercial agreements;
  • leasing documentation;
  • director resolutions;
  • shareholder resolutions; 
  • trustee resolutions; and
  • other documents given on oath or affirmation.

Witnessing a Signature

For a person to be a witness, they must be:

  • at least 18 years of age; and
  • of sound mind.

A person of sound mind is someone who is not suffering from a mental disability and is not under the influence of any external substance. 

Additionally, an authorised witness must witness certain documents. These documents are affidavits or affirmations. Authorised witnesses are a:

Key Takeaways

Anyone in business will be familiar with contracts. They are the basis for any commercial relationship and are legally enforceable as long as they satisfy all the elements of a binding contract. Certain contracts require a witness signature for them to be enforceable. These contracts generally concern the disposition of property, commercial dealings or court documents. Further, these contracts need a witness signature as they deal with transactions or issues of higher value. A witness must also be at least 18 years of age and of sound mind. 

For legal assistance with managing contracts, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

When do I need to have my contract witnessed by a Notary Public?

If your document needs to be witnessed overseas, you will need to use a Notary Public to witness your contract.

What does a witness need to do?

A witness must authorise the identity of the signatories and make sure both parties intended to enter into the agreement.

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