In a decade where electronic communications increasingly facilitate business transactions, there are opportunities to sell your business to an individual far away from you. Consequently, if you enter into a sale of business agreement, you may wonder whether you can sign your contract electronically. Notably, there are specific requirements you must meet to have a valid e-signature. This article explains the legal requirements for electronically signing a sale of business agreement.
What is an Electronic Transaction?
An electronic transaction is any business deal that involves digital communication to exchange:
- data;
- images;
- speech; or
- text.
Some common examples of digital communication include:
- facsimile; and
- emails.
What is an Electronic Signature?
Australian law does not provide an approved list of ‘signature technology’ for electronic transactions. Therefore, this offers you flexibility when determining the most appropriate method of signing your contract.
An electronic signature usually refers to using technology to place text, an image or a mark on a document. Popular methods of signing documents electronically include:
- using a link that enables you to enter your name and click to sign;
- inserting your signature into the document via JPEG;
- signing via e-signing software (i.e. DocuSign); or
- using an encrypted digital signature accessed via a pin or USB.
Electronic Signature Requirements
The Electronic Transactions Act 1999 (Cth) sets out how you may exchange information and sign your contract for an electronic signature to be valid. When signing a contract electronically, ensure you:
- identify your intention and role in the agreement;
- use a reliable method of signing; and
- use an approved and appropriate method of signing.
Additionally, you can give consent and prove your identity if you have:
- signed off on an email with your name;
- provided your signature via DocuSign or similar JPEG format; or
- returned a signed facsimile of the contract.
How Does the Law Apply?
Each state in Australia has laws regarding electronic transactions. For example, for an electronic signature to be valid under Queensland state law, it must comply with the Electronic Transactions (Queensland) Act 2001. In most cases, you do not need to make and sign a contract in writing. However, you must sign a limited number of contracts writing. Currently, the law is unclear about whether you can validly sign certain documents, like deeds, electronically.
The Corporations Act 2001(Cth), which dictates how a company may execute legal documents, was recently amended to allow a company to electronically execute a legal document, provided they meet several conditions. This is similar to the requirements under the Electronic Transactions Act.
To rely on the other party’s execution under the Corporations Act, you must be satisfied that:
- you use a method to identify the person signing the document;
- they indicate their intention to sign the document; and
- the method of signing the document is reliable and appropriate for the purpose you are creating it.
You can achieve a suitable method of signing by using a reliable document execution platform like DocuSign.
What Are the Risks of Signing a Contract Electronically?
The onus of proving that a party intended to sign a contract is on the party looking to enforce the contract. Therefore, it is essential to ensure that methods used for electronic signatures are secure and reliable to avoid any disputes.
Being able to sign contracts electronically may lead to unintentional agreements. This is particularly the case with email correspondence, where your electronic signature can indicate consent to an agreement.
The risk is that you did not intend to agree to terms without a formal contract. Alternatively, you may have intended to agree to one specific point and negotiate other points further.
Furthermore, providing your signature electronically may present a security risk. You should protect your electronic signature with a strong password or encryption to protect yourself. Password protection also reduces the risk of identity fraud if you log into a browser to access a page requiring your electronic signature. Additionally, you can install software that asks for multi-factor authentication when you access a protected page or document.

When you are ready to sell your business and begin the next chapter, it is important to understand the moving parts that will impact a successful sale.
This How to Sell Your Business Guide covers all the essential topics you need to know about selling your business.
Key Takeaways
When buying or selling a business anywhere in Australia, it may be possible to sign your contract electronically. However, digitally signing a legal document carries certain risks, such as unintentionally consenting to terms or increasing the likelihood of security threats. Therefore, before you sign an important document electronically, you should carefully consider the risks associated with this method of signing.
If you have questions about signing a sale of business agreement electronically, our experienced business lawyers can assist as part of our LegalVision membership. 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 1300 544 755 or visit our membership page.
Frequently Asked Questions
Yes, a digital signature will be valid provided it meets the legal requirements. However, digital signatures are not available for all types of contracts. If you need assistance, you should consult a lawyer for further advice.
Your business can minimise the risk of fraud by using anti-virus software, implementing password encryption, using multi-factor authentication and using a strong password.
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