In most cases, the use of electronic signatures is legally binding in Australia. However, there are some important exceptions that you should be aware of.
The legality of the “use of wet ink”, and original signatures are well understood. However, with the emergence of new technology and the proliferation of e-signatures due to COVID-19, it’s important to understand the law surrounding the use of electronic signatures.
This article explains whether and how electronic signatures are legally binding in Australia.
Before we can say whether electronic signatures are legally binding in Australia, we need to define what is meant by an electronic signature. A signature demonstrates a person’s intention to be bound by the terms of an agreement. This is a key element of both a legally binding contract and a deed.
Defining what a signature is has been the subject of great legal debate. In Legal Services Board v Forster, the court accepted an argument that:
“A signature is not necessarily the writing in of a name, but may be any mark which identifies it as the act of the party”
Another way to sign a document electronically is to “digitally” sign with public key infrastructure. This method involves the use of a cryptography platform, such as DocuSign, in verifying the signor’s digital identity.
Public key infrastructure works by producing a “public key”, which is a randomly selected set of numbers that encrypts a document, and a “private key”.
The private key is also comprised of randomly selected numbers which are then used by the recipient to decrypt a document.
To ensure that the parties can identify one another:
These forms of electronic signature appear to satisfy the legal requirements surrounding electronic signatures. In turn, they appear to provide legal validity to electronically signed contracts and deeds.
The legal framework for electronic signatures in Australia is primarily governed by the Electronic Transactions Act 1999. This is a federal law, which provides a consistent legal foundation for electronic signatures throughout Australia.
Under this law, electronic signatures are generally considered equivalent to handwritten signatures in most cases. Further, electronic documents are generally considered legally enforceable.
However, it’s important to note that there may be specific requirements and regulations that vary by State or Territory in Australia. These requirements may vary in certain situations or for specific types of documents.
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During the height of the COVID-19 pandemic, the Queensland government enacted temporary legislation that recognised electronic signatures as being legally binding.
Queensland has now enacted permanent legislation making electronic signatures legally binding.
The Justice and Other Legislation Amendment Act 2021 (Qld) commenced on 30 April 2022.
The Act amends the:
Traditional methods of execution (wet ink signing) are not affected and can continue.
However, certain documents may now also be validly signed using electronic means.
To achieve this, each updated Act now contains a definition of “Accepted Method.” To conform to an “Accepted Method,” a method of electronic execution must:
Businesses have traditionally satisfied these legal requirements for both contracts and deeds by appropriately drafting the documents and requiring customers to execute hardcopies.
For companies that extend credit to a large number of customers, the volume of paperwork can be difficult to manage, costly and administratively time-consuming.
Technology has rapidly evolved to offer solutions that reduce the administrative burden, improve efficiency and fasten the pace at which business transactions take place. In particular, electronic signatures play an increasingly important role in commercial agreements.
A deed can now be signed by electronic means using an “Accepted Method”. This overrides the previous common law requirement for deeds to be signed in physical form and “sealed”.
A deed signed by an individual no longer needs to be signed in the presence of a witness
Corporations may sign deeds electronically in line with standard execution protocols consistent with the Corporations Act 2001 (Cth).
A document may be signed in counterpart, as long as each counterpart is a complete copy of the document.
If you have questions about how to sign a deed electronically, seek out online legal advice.
Where a declaration is signed electronically, it must be witnessed by a “special witness” (such as an Australian legal practitioner – including those that provide online legal advice, notary public or other prescribed person).
The document may be signed electronically in the presence of the witness or witnessed remotely over an audio-visual link.
There are important additional procedural requirements for the electronic signing of declarations, including that:
If the document is signed via an audio-visual link, the special witness must also:
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