When is it OK to sign with an electronic signature?

With advances in information technology, it’s becoming more common for people to sign documents such as contracts, agreements and declarations electronically.

Using electronic signatures means that a physical document doesn’t need to be passed around to everyone who is required to sign, saving people time and money. However, it’s important to be aware of the laws surrounding electronic signatures. Not all documents can be signed electronically, and therefore it’s important to understand the rules around using electronic signatures.

When is an electronic signature valid?

An electronic signature will generally be valid if it meets three criteria.

Firstly, a signing method must be used to identify the person signing and indicate their intention (i.e. show that they agree with the information contained in the document). Possible methods include:

• typing of a name on a document;
• typing of a name at the foot of an email;
• using an electronic footer in an email (i.e. a standard logo at the bottom of emails which contains the person’s name and company details);
• clicking on a “Book Now” button at the end of a hotel booking process; and
• using a PIN or password to authorise a transaction.

Secondly, the signing method must be as reliable as is appropriate in the circumstances. For instance, if the document contains highly sensitive information, the courts may expect a secure signing method to be used.

Interestingly, the Federal Court recently held that a digital pen used to sign an electoral enrolment form, and an online fax service used to send the form to the Electoral Commission, were reliable signing methods. This is despite the Electoral Commissioner arguing that only hand-signed forms were usually accepted.

Thirdly, the people involved must have agreed in advance to the particular signing method being used. This agreement may be express (e.g. the document recipient says they accept electronic signatures) or implied (e.g. where negotiations and offers occurred via email, the courts may infer the people involved agreed to use electronic signatures).

When can’t electronic signatures be used?

Depending on the laws that apply in your State or Territory, individuals may be prohibited from using electronic signatures to sign certain documents. Documents that need to be witnessed generally can’t be signed electronically. This is because the witness and signatory must be physically present in the same room at the time of signing.

Documents that need to be witnessed include:

• wills and powers of attorney;
• affidavits and statutory declarations;
• deeds;
• mortgage documents and guarantees; and
• transfer of land documents.

If you’re unsure whether you can sign a document electronically by law, the safest option is to use old-fashioned pen and paper.

Company directors and secretaries should also be cautious about executing documents under the Corporations Act with electronic signatures. Parliament and the courts have not yet made it clear whether electronic signatures in this context are valid, therefore they should be avoided.

How we can help

If you are involved in a commercial dispute, Slater and Gordon can help you by:

• Advising you as to whether a transaction entered into by yourself or another person is valid
• Assisting you to determine what your options are or what steps to take
• Representing you in any court proceedings

You can learn more about our commercial litigation services here, or if you have an enquiry about a commercial dispute, you can submit an enquiry online.