Reading time: 4 minutes

In a decade where electronic communications increasingly facilitate business transactions, there are opportunities to sell your business to an individual located a fair distance away. If you are entering into a sale of business agreement, you may be wondering whether you can sign electronically. A transaction that you make and sign electronically will be valid if your signature meets certain requirements. This article explains the legal requirements for signing a sale of business agreement electronically.

What Is An Electronic Transaction?

A business deal involves an electronic transaction when you exchange digital communications with the other party through the medium of either:

  • 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 a list of approved ‘signature technology’ for use in electronic transactions. This means that you have some flexibility when determining the most appropriate method of signing your contract.

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.

What Is Required for Signing a Contract Electronically?

The Electronic Transactions Act 1999 (Cth) (the Act) sets out how you may exchange information and sign your contract for an electronic signature to be valid. When signing a contract electronically, you need to ensure your signature:

  • clearly identifies your intention and role in the agreement;
  • has used a reliable method of signature; and
  • has been consented to as an appropriate method of signing.

Additionally, your consent and identity may be proved 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, the requirements for an electronic signature to be valid under Queensland state law are set out in 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 certain types of contracts in writing. The law is unclear about whether you can validly sign certain other kinds of documents, like deeds, electronically.

For an electronic signature to be valid in Queensland, it must meet certain requirements, including that the:

  • signature must be in writing;
  • method of signing must be reliable; and
  • intention of each party must be clear.

For example, if a written electronic signature is provided by email, the signer’s intention could be shown through previous email correspondence. The person who signed the email would be easily identifiable by their email signature and email address.

What Are the Risks of Signing a Contract Electronically?

If you sign a contract electronically, your earlier correspondence may indicate that you consent to the agreement.

For example, if you are negotiating the terms of a sale with your purchaser via email, signing off with ‘Sounds good. Regards, [Your name] may be considered acceptance of the terms and an electronic signature.

The risk of this, of course, is that you may not have intended to agree to terms without a formal contract. Alternatively, you may have intended to agree to one specific point and negotiate other points further.

Providing your signature electronically may present a security risk. To protect yourself, you should protect your electronic signature with a strong password or encryption. Password protection also reduces the risk of identity fraud if you need to log into a browser to access a page which requires your electronic signature. You can also install software that asks for multi-factor authentication each time you access a protected page or document.

Key Takeaways

When buying or selling a business anywhere in Australia, it may be possible to sign your contract electronically. However, signing a contract without putting pen to paper carries certain risks. Before you decide to sign an important document electronically, you should carefully consider the risks associated with this method of signing. If you have any questions about signing contracts electronically, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.


New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards