As an increasing number of businesses move online, we have seen an equal increase in the need for businesses to be able to transact quickly and efficiently online. A commonly asked question is whether a business can accept an electronic signature. We aim to answer this question and provide you with some general guidance on what is and isn’t acceptable as an electronic signature.

Regulatory Framework

The Commonwealth’s Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2000 covers the use of electronic signatures. There is also equivalent state legislation such as the Electronic Transactions Act 2000 (NSW). These Acts recognise that a transaction is not invalid because it took place using one or more electronic communications.

What is an electronic signature?

An electronic signature is a term used to describe any electronic means that have the purpose of being a personal signature.

This can include:

  • typing a name,
  • ticking a box,
  • inserting a scan of a person’s signature into a document, or
  • stating in an electronic communication that the communication itself is to be taken as the signature.

Electronic signatures can also include a digital signature. A digital signature is a type of electronic signature which relies on a form of encryption (known as asymmetric cryptography) to authenticate messages. The use of a digital signature usually requires the purchase of a program or software and is typically used in high security/value transactions.

Key principle

The general rule is that an electronic signature does not invalidate a transaction.

Importantly, an electronic signature must fulfil certain requirements to be valid. These include the following:

  1. Identification: The electronic signature must identify the person signing the document and their intention to sign the document;
  2. Reliability: The method of electronic signing must be reliable in the circumstances generating the electronic communication, and
  3. Consent: The person receiving the electronic communication must consent to the use of the electronic signature to execute the contract.

Exclusions

There are a number of laws excluding the law of electronic communication from operating. When this is the case, an electronic signature cannot be used in place of a standard original signature on paper.

An example of a law excluding the use of electronic signatures is the entire Corporations Act. Company directors and secretaries must execute paper versions of any document or agreement requiring their signature. Electronic signatures would also be impracticable where a person’s signature requires a witness. While there is no issue with a person electronically signing the document, electronic communication cannot satisfy the requirement that a person witness the signature.

Common Use

Electronic signatures unquestionably present difficulties and challenges in particular cases, however, there are also numerous practical examples of electronic signatures improving a business’ efficiency in its day to day operations. Consumers and businesses use electronic signatures to enter into supply and service agreements. For example, purchasing groceries, legal services or doing their banking online.

Conclusion

If you are considering moving your business online, you should speak with an experienced online business lawyer about how you can utilise electronic signatures to improve your business processes. LegalVision’s lawyers would be pleased to answer any of your questions!

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Nicole Wilson

Get a Free Quote Now

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • We will be in touch shortly with a quote. By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.

Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy