Are electronic signatures legally binding in Australia? 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, original signatures is 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.
Author: Farrah Motley, Legal Principal of Prosper Law and provider of online legal advice.
What is an electronic signature?
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 the relevant agreement. This is a key element of both a binding contract and deed.
Defining what a signature is has been the subject of great legal debate. In Legal Services Board v Forster, Emerton J 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”
What is a digital signature?
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:
the private key is only made available to the signor
the signor can verify the sender’s identity by confirming with an independent third party “certificate authority” that the public key belongs to the purported sender
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.
Are electronic signatures legally binding in Queensland?
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:
Property Law Act 1974 (Qld), so that deeds can be legally signed using electronic signatures
Oaths Act 1867 (Qld), so that statutory declarations can be legally signed using electronic signatures
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:
identify the signatory, and their intention in relation to the document;
be "as reliable as appropriate" for the circumstances or purpose of the document; and
where relevant, be consented to by all other signatories to the document (consent can be express or implied).
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.
Electronic signatures and deeds
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.
Electronic signatures and Statutory Declarations
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:
it must contain a statement that it was made and/or signed in electronic form, as applicable
the witness must take reasonable steps to confirm the name and identity of the signatory
the witness must include their full name, status as a "special witness", their qualification and place of employment where applicable
If the document is signed via an audio-visual link, the special witness must also:
observe the signatory direct the substitute signatory to sign the document (if applicable)
satisfy themselves in "real time" that the document is signed by the signatory (or substitute signatory)
satisfy themselves that the signatory is signing (or directing the substitute signatory) freely and voluntarily
confirm the document as soon as practicable after witnessing it
give the document, or a true copy or counterpart of it, to the signatory or a relevant person
The legislation can be accessed at https://www.legislation.qld.gov.au/
How can Prosper Law help?
Prosper Law’s legal services are provided by Farrah Motley, an Australian online lawyer that provides online legal advice.
Contact the team at Prosper Law today to discuss how we can provide you with online legal advice for a fixed fee or at affordable hourly rates.
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