Can the centre hold?

Dear reader, I guess you will be asking yourself the question “what is this article all about?” Well, it is good you ask, and I hope by the end of this piece we will learn a few nuggets that can hold the centre together in our engagements with our customers, suppliers or business partners.

Anyway, have you appended your signature to a document recently? Well, we have all signed one document or another in our lives.

It is usually part of our daily activities at our workplaces to sign documents. Indeed, the use of signatures is very important and comes in handy when we want to enter into formal contractual agreements. You may have several documents with you now that require your signature with other signatories. How do you go about signing them?

Before then, what is your understanding of a signature? Well, we can understand a signature to mean any visible or identifiable mark that we make on any valid document to show either our approval, acceptance, or knowledge of it. As a mark, an official stamp can constitute a signature. More often, we craft our personal signatures from our names. Some people, especially illiterates, prefer to use their thumbprint to authenticate or bind themselves to a written agreement. Regarding social media or the Internet, a click on ‘accept’ after reading such rules of engagement constitutes the signature.

We also have a digital form of signatures engraved or fixed on a document. Indeed, the Electronic Transactions Act (Act 772), 2008, provides for digital signatures. From my understanding, the central bank Governor’s signature on our currency notes is an example of a digital signature and makes each of them legal tender for the payment of any amount of goods and services in the country. In the spirit of signatures, we need to consider the terms and conditions of a written agreement to help us appreciate the issue under discussion.

Terms and Conditions

Terms and conditions are integral parts of contracts we sign, and enforceable when the contract itself is valid as defined by law. For instance, the terms and conditions in a credit transaction contain the fine details of the contract being entered into between a bank and its customer (business or personal). We can also refer to the terms and conditions in agreements we have with our service providers. As a relevant part of a contract, terms and conditions include the basic obligations of each party and aim at clarifying how disputes can be resolved.

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That is why we expect common understanding from the onset, and rightly so, before appending our signatures to any documents. Some of the relevant documents we can sight in a normal credit transaction that needs valid signatures include pre-loan agreements, facility letters, and deeds (mortgage, assignment, personal/directors’ guarantee etc.) covering the collaterals. You can also give further examples of legal documents peculiar to your industry and the relevance of your signature on them.

As applicable in such circumstances, we try to avoid a situation where a customer could say he/she signed the document under duress (forced to sign the transaction agreement against his/her own free will); by either allowing them to seek independent legal advice or read the documents to the best of their understanding before signing them in our presence. It is at this crucial stage of signing the contract that the centre can either hold or fall apart – especially when you have a more-than-one-page document.

Sign the pages within

It is a statement of fact and from experience we put on record that legal documents we have identified in relation to credit transactions provide a certain space, wherein the lender and borrower with their witnesses are required to affix their signatures.  But be that as it may, signatories (counterparties) will need to go beyond those definite spaces to append their signatures on each of the pages in the document before exchanging copies.

This may not be the norm and sound awkward to many, but the reason is simple and established from an inadvertent omission in a contractual relationship between a financial institution and one of its customers. The bank and the customer signed a 6-page deed of mortgage, in which the (last) page 6 was noted for the signatories. Owing to many reasons, the customer was unable to sign and the bank decided to recover the property through the legal process. It was at this stage that the centre was unable to hold. Ambiguities popped up!

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The bank and the customer’s copies of the deed of mortgage were, in fact, bearing their true and confirmed signatures – but a few lines of the numbered terms and conditions were altered. Alas! The innocent flowers (the signatories) with the hidden serpents under them appeared with venom.  Which of the parties, would you say, was trying to inflict pain on the other with their venomous bite?

From all indications, you cannot rule out employees’ culpability in such circumstances or dismiss the customer’s ability to do so – especially when some customers entice employees and use them as conduits to commit fraud. Would it be difficult for any of the parties (either the customer or bank’s officers) to type such documents with the same font-size and spacing but with altered conditions? At least, the bank has the templates (soft copies); but you and I can only hazard a guess since we were not there as witnesses.

It is not the case that those conditions were altered or not noticed at the time of signing the definite pages of the documents. Both parties actually signed the exact (word for word) documents, but the inability to counter-sign (beneath) each page opened the documents up for the ambiguity to arise thereafter. This is a risk that has cost and reputational implications. You will candidly agree with me that had the signatories signed all the pages respectively, the mere sight of the counterparty’s copies would have confirmed the whole documents’ authenticity.

There is a Chief Executive Officer who was recently elected president of his industry. Having had the opportunity to manage his corporate account in a previous job, I can say it is in his DNA. From the onset of the relationship with him, he was quick to request such counter-signatures on each page of loan facility documentations without necessarily being told. I hope it will be useful and help to prevent misunderstanding when we cultivate the habit of counter-signing respective pages of such documents. Let’s build trust with it, and let the centre hold.

Dear you! I have signed off. It is now your turn to counter-sign each of the pages. May the good Lord bless you for doing so. Bye Bye!

 

FIN

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