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Insights

Protect your business in the digital age

30 Nov 18

In today’s digital world, most organisations rely on electronic systems and communications in their daily operations to increase efficiency, streamline business processes, reduce costs and keep up with new technology. With buzzwords such as ‘paperless office’ and ‘digitisation’, organisations are commonly transacting electronically, signing electronic contracts and using electronic signatures rather than putting pen on paper, writes Salvos Legal Solicitor Fiona Young.

Electronic contracts and signatures are only going to become more common. With advancements in technology including sophisticated electronic execution software and tools, there are still questions and concerns within organisations surrounding the validity and enforceability of electronic transactions and signatures.

Salvos Legal Senior Associate, Fiona Young provides much needed clarity on what to consider when an electronic signature is involved.

What is an electronic signature?

To put it simply, an electronic signature is the use of a person’s name or mark, in an electronic form, to identify the person and show that he or she intended to sign a document.

There are many types of electronic signatures, for example:

  1. A typed name i.e. typing a person’s name into a document electronically.
  2. A scanned version of a handwritten signature (for letters sent by email).
  3. Signing into a panel by using a trackpad, stylus or finger (think couriers).
  4. PIN and password may be used as a signature (for banking transactions).
  5. Clicking an ‘I agree’ or ‘I accept’ button (when buying goods or services online).
  6. Using e-signing software such as DocuSign or Adobe Sign.

Whether or not each type of signature is acceptable and valid will depend on the relevant jurisdiction and the context in which it is used.

Law in Australia – Electronic Transactions Acts

In Australia, the law allows most documents to be signed electronically. In these cases, electronic signatures are no different to the traditional ‘wet ink’ signatures.

At the Commonwealth level, the Electronic Transactions Act 1999 (Cth) purports to ensure that a transaction under a Commonwealth law will not be invalid simply because it was conducted through one or more means of electronic communication. The Act applies to all laws of the Commonwealth unless they are specifically exempted by the Electronic Transactions Regulations 2000 (Cth).

Each State and Territory has its own Electronic Transactions Act which governs electronic transactions. These are similar to the Commonwealth Act and are all based on the general principle that no discrimination or distinction will be made between paper based transactions and electronic transactions.

However, there are slight differences between each jurisdiction so if you are considering an electronic transaction under a particular State or Territory law, it is important to check the legislation in that relevant State or Territory.

Requirements for electronic signatures

The effect of the various Electronic Transaction Acts is that electronic transactions and any electronic signatures used in the transactions are valid as long as certain conditions are met. All of the following conditions must be met for an electronic signature to be accepted – these conditions are similar in all jurisdictions:

  1. A method is used to identify the person and to indicate the person’s intention in respect of the information communicated.
  2. The method of identification must be as reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in light of all the circumstances.
  3. The person to whom the signature is given must consent to the use of electronic communication to fulfill the requirement for a signature and to the method of identification. ‘Consent’ can be reasonably inferred from the conduct of the person.

Exceptions

While many documents can be signed electronically, certain documents are excluded from the Electronic Transaction Acts and regulations and cannot be signed electronically. Some examples include wills, mortgage documents, statutory declarations, powers of attorney, court document and documents which require witnesses. The Corporations Act 2001 (Cth) may also be excluded in certain circumstances.

Each Electronic Transactions Act has different exceptions and it is important to check the legislation and regulation in the relevant State or Territory for the validity of the document or transaction.

Takeaway – practical checklist

In summary, you should always check the following to determine whether an electronic signature on a document or an electronic transaction is valid and legally binding:

  1. Which jurisdiction and what law will apply to the document and transaction? Check the Act and any regulations in the relevant jurisdiction.
  2. Is the document or transaction excluded from the applicable law?
  3. Does your proposed method satisfy the criteria regarding identity and reliability?
  4. Has the other party consented to the method used?

For further information, contact Fiona Young on 02 8202 1555 or email fiona.young@salvoslegal.com.au. Salvos Legal is an award winning social enterprise law firm that can help individuals and businesses in all areas of commercial, property and migration law. Salvos Legal has the expertise to assist you in preparing your Will or the Administration of an Estate

Disclaimer: The content contained in this article is of a general nature only and provides an overview on matters of interest. It is not, nor is it intended to be legal advice. You should seek legal or other professional advice before acting or relying on any information contained in this article.

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