A major supplier contract lands in your inbox needing signatures. Your operations manager asks who should sign. Your legal team sends back a version with an execution block that doesn't match how your company is structured. The deal is time-sensitive. Getting this wrong — the wrong signatories, an incomplete block, or an electronic signature where wet ink was required — means the contract may not be validly executed, and downstream disputes about whether your company is actually bound become significantly more expensive than they needed to be.
An execution clause is the part of a contract that sets out how a party signs to make the document legally binding. For Australian companies, it specifies who must sign, in what combination, and whether the document can be signed electronically, in counterparts, or under a specific form of authority. Getting it right the first time is a minor administrative matter. Getting it wrong creates uncertainty at exactly the moment you need clarity.
The authority clause — who can bind the company
Before execution happens, the execution clause must correctly identify the person or persons who have authority to sign on behalf of the company. This is determined by the Corporations Act 2001 (Cth) and by the company's own internal governance documents.
Key points:
- Only a director, company secretary, or an authorised officer or agent can bind the company through execution
- The company's constitution or a board resolution can expand or restrict the default authority rules
- An internal email approving a contract is not the same as authority to execute it — the approval process and the execution authority are different things
- Maintain a register of current authorised signatories, updated whenever director or secretary appointments change
The trap: out-of-date signatory registers after director changes. When a director resigns and a new one is appointed, document the change in a board resolution and update the internal list. Contracts executed by a person who was no longer a director at the time of signing create exactly the kind of authority dispute you want to avoid.
The section 127 execution block
Section 127 of the Corporations Act 2001 (Cth) sets out the methods by which a company can validly execute a document and, critically, gives the other party statutory comfort that the document has been duly executed when those methods are used. This is often called the "safe harbour" for execution — the counterparty can assume the document is properly signed without investigating your internal governance.
The permitted methods under s 127 are:
- Two directors sign the document
- One director and one company secretary sign the document
- For proprietary companies with a single director: following amendments introduced by the Corporations Amendment (Meetings and Documents) Act 2022 (Cth), a sole director of a proprietary company can execute under s 127 even if they are not also the company secretary
A typical s 127 execution block reads:
Executed by [Company Name] ACN [●] in accordance with section 127 of the Corporations Act 2001 (Cth):
Signature of Director Full Name
Signature of Director/Company Secretary Full Name
Drafting choice: the execution block must accurately reflect your company's structure. If you have a sole director, use sole director wording. If you have a director and secretary, both must sign. A block that says "two directors" but is signed by a director and secretary — or vice versa — creates an argument about whether s 127 was properly used.
Electronic execution
The 2022 amendments to the Corporations Act 2001 (Cth) confirmed that companies can execute documents electronically, including deeds, provided the method:
- Identifies the signatory
- Indicates their intention to be bound
- Is reliable in the circumstances (or is proven to have been used appropriately)
In practice, this covers platforms like DocuSign and Adobe Acrobat Sign, a typed name with evidence of intent, or a scanned image of a handwritten signature placed in the signature block.
Practical requirements:
- The execution block should expressly permit electronic signing — a block that does not address electronic execution may leave room for an argument that wet ink was required
- Keep the audit trail or completion certificate generated by the e-sign platform — this is your evidence of when each party signed and what they signed
- Use multi-factor authentication and role-based access controls on your e-sign platform for high-value contracts
- Deeds can now be executed electronically by companies (the witnessing requirements that applied pre-2022 for company deeds have been substantially relaxed), but where an individual rather than a company must sign a deed, state-based witnessing rules may still apply
The trap: relying on electronic execution where the document or the counterparty requires wet ink. Some government forms, some financial institution documents, and some international counterparties still require physical signatures. Check before assuming e-sign is acceptable.
Counterparts clause
A counterparts clause allows each party to sign a separate copy of the same document, with all signed copies together forming a single binding agreement. This is standard practice and removes the need for all signatories to be in the same place at the same time.
What the clause should cover:
- That the document may be executed in any number of counterparts
- That all counterparts together constitute one agreement
- Optionally: that a facsimile or scanned copy of a signed counterpart is as effective as an original
The trap: a contract without a counterparts clause where the parties sign different physical copies. Without the clause, there can be an argument that there is no single signed original and therefore no binding agreement. This is unlikely to succeed in a commercial context, but it is an unnecessary risk.
Section 126 and delegated authority
Where execution under s 127 is not used, a company can still be bound under s 126 of the Corporations Act 2001 (Cth) by an individual acting with the company's express or implied authority — for example, a CEO, general manager, or senior officer authorised under a delegation policy or board resolution.
Using s 126 does not give the other party the same statutory comfort as s 127 — they cannot rely on the same assumptions and may need to investigate whether the signatory was actually authorised. For major transactions, s 127 is the more reliable path.
Where you use s 126 execution, the execution block should identify the signatory's role and state that they sign for and on behalf of the company under the authority delegated to them.
Power of attorney
A company can appoint attorneys to execute documents on its behalf. This is useful where directors are unavailable, where the company has significant transaction volume, or where it wants a trusted person such as a senior manager to execute a defined class of contracts.
Execution block requirements for attorney execution:
- Identify the attorney and state they sign under the power of attorney
- Include the date of the power of attorney instrument
- Keep a certified copy of the power of attorney instrument with the executed document
The trap: an execution block that does not cite the power of attorney instrument. Without that reference, the other party may not be able to confirm the attorney had authority without further investigation.
Optional and situational clauses
Some execution arrangements require additional terms or steps:
- Deed versus agreement: If a document must be executed as a deed (for example, certain guarantees, releases, or security instruments), the document must state it is executed as a deed and use deed-appropriate execution blocks. The formalities for deeds differ from those for ordinary agreements, and using the wrong form of execution can affect whether the document takes effect as intended.
- Witnessing for individuals: Where an individual (not a company) signs a deed, state-based witnessing requirements may still apply depending on the jurisdiction. These requirements are separate from the 2022 reforms that relaxed witnessing for company deeds.
- Board resolution: Where your constitution or a shareholders agreement requires board approval before execution of certain documents, the resolution should be passed before execution, and a copy kept with the executed agreement.
How Artificer Legal can help get execution right
Execution errors are almost always preventable. Artificer Legal can assist with:
- Reviewing execution blocks in documents you are about to sign to confirm they are consistent with your company structure and the applicable method
- Drafting compliant execution blocks for contracts and deeds, including standard templates for your common document types
- Advising on authority — who in your organisation needs to sign which documents, and what board resolutions are required
- Electronic execution setup — advising on platforms and audit trail requirements for high-volume or high-value execution workflows
- Powers of attorney — drafting and registering powers of attorney for corporate execution purposes
The clause that decides enforceability
The most commonly misdrafted element of execution clauses is the signatory combination in the execution block. A block that says "director/company secretary" but is signed by two directors — or a block that uses two-director wording for a sole-director company — creates a gap between the intended execution method and the actual signatures. That gap is usually discovered at the worst possible time: when the counterparty seeks to enforce the agreement, or when a third party (a bank, a buyer, a regulator) requires certainty about whether the document was validly executed.
Key points:
- Section 127 of the Corporations Act 2001 (Cth) provides a statutory safe harbour for company execution — two directors, a director and secretary, or (after 2022 amendments) a sole director of a proprietary company may execute under this provision.
- The execution block must match the company's actual structure — a mismatch between the block wording and the actual signatories undermines the s 127 safe harbour.
- Electronic execution is permitted for companies under the 2022 amendments, including for deeds, provided the method identifies the signatory, indicates intent, and is reliable.
- A counterparts clause is standard practice and should be included in all multi-party agreements.
- Where authority is delegated under s 126 or a power of attorney, the execution block must identify the source of the authority.