On behalf of your business, you sign many contracts frequently. As such, you must know that the contract is valid and enforceable and meets the necessary signature requirements. This is particularly so with the increasing prevalence of electronic signatures. It is important that you know your contractual rights when entering into contracts electronically and whether or not your electronic signature is binding. Therefore, this article goes through:
- electronic signatures in Australia;
- how they operate; and
- whether they operate differently from other means of entering into a contract.
What is an Electronic Signature?
An electronic signature is a signature you use on an electronic document that serves the same purpose as a written signature on paper. For example, this may be a scan of a person’s signature into a contract or text on an email.
An ‘electronic signature’ is a broader concept than a ‘digital signature’, which is a mathematical process for determining the authenticity of a digital message. Keep in mind, however, that a digital signature is a type of electronic signature. You can create a digital signature through software programs such as DocuSign and Adobe EchoSign.
What Are the Applicable Laws?
The Electronic Transactions Act 1999 enforces how you can use an electronic signature in Australia. As a result, under Australian law, contracts are enforceable if the parties:
- make them verbally;
- physically sign the document with a wet ink; or
- use electronic signatures.
There are different laws in each state and territory that govern electronic signatures:
| State or Territory | Law |
| New South Wales | Electronic Transactions Act 2000 (NSW) |
| Queensland | Electronic Transactions (Queensland) Act 2001 (Qld) |
| Victoria | Electronic Transactions (Victoria) Act 2000 (Vic) |
| Australian Capital Territory | Electronic Transactions Act 2001 (ACT) |
| South Australia | Electronic Transactions Act 2000 (SA) |
| Western Australia | Electronic Transactions Act 2011 (WA) |
| Tasmania | Electronic Transactions Act 2000 (Tas) |
COVID-19 social distancing requirements led to the Federal and certain State Governments passing new regulations to allow for the electronic execution of company documents. This is in the Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (CA Act). There have also been amendments to the relevant laws named above in specific states and territories, for example, the Electronic Transactions Amendment (Remote Witnessing) Act 2021 (NSW) in New South Wales.
Continue reading this article below the formValidity of Electronic Signatures
Note that for documents under section 110A(2) of the CA Act, consent is no longer strictly required.
Exceptions to Validity and Use of Electronic Signatures
In each state and territory, different exceptions apply to the validity and use of electronic signatures. However, the six main categories of exceptions exist that might be applicable in different states and territories include:
- documents requiring a witness;
- documents to be personally served;
- court documents;
- certain deeds,
- powers of attorney; and
- wills.
For instance, the Courts have determined that deeds must be executed on paper and signed by hand. This is because deeds are a unique class of document capable of assigning obligations without consideration. Additionally, executing a deed requires a witness. Whether or not a witness can sign electronically is a matter of debate in the legal field. Traditionally, the courts also require deeds to be printed on:
- paper;
- parchment; or
- vellum.
Some interpretations of the law suggest that deeds that only exist as a soft copy may not take effect as a deed. As a result, deeds are typically not signed electronically. However, with the new federal legislation, you may execute a deed electronically in specific states and territories. You should not assume that you can electronically execute a deed as additional exceptions may apply depending on the state or territory. We have set out an example in the table below for clarity.
| Jurisdiction | Deeds (form and execution) |
| Federal Government | Deeds may be in electronic form and signed electronically under s 127 or through an authorised agent under s 126. It does not need to be witnessed unless under common seal or delivered in order to be validly executed. |
| New South Wales | Deeds may be in electronic form and signed electronically. |
| South Australia | No changes to existing requirements i.e. physical witness or ‘wet ink’ signatures. |
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Key Takeaways
Electronic signatures are becoming more common today. Therefore, you should know your contractual rights when entering electronic contracts and whether your electronic signature is binding. When determining whether an electronic signature is appropriate, consider the type of document you are signing and the location.
If you are entering into a contract electronically and would like assistance, LegalVision’s contract lawyers can help, For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1800 534 315 or visit our membership page.
Frequently Asked Questions
What is an electronic signature?
An electronic signature is a signature that is used on an electronic document and is intended to be a signature. For example, a scan of a person’s signature into a contract or text on an email is a signature.
Are electronic signatures valid?
To ensure the validity of an electronic signature, you must satisfy three criteria. Firstly, the recipient must consent to receive information electronically. Secondly, the signing method must identify the person sending the information and indicate that the content of the electronic document that has been signed is approved by them. Thirdly, the signing method must be as reliable as is appropriate for the purpose of the electronic document’s creation.
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