The use of information technology and digital systems in everyday business practice is becoming ubiquitous. The use of electronic signature (‘e-signature’) technology, however, has been less pervasive, despite recognition of its validity by the Electronic Transactions Act 1999 (Cth).
Nevertheless there has been growth in recent times, driven in no small part by the wide range of solutions now available. This paper provides an overview of Australian law regarding the legal validity of e-signatures.
In a follow up paper, we will look more closely at the commercial e-signature products on the Australian market and specifically assess their legal validity.
In Australia, the use of e-signatures is governed by Federal and State legislation. The Electronic Transactions Act 1999 (Cth) is the federal law, while the corresponding State and Territory Acts apply to their respective jurisdictions.
The general rule provided for by the legislation is that:
– Identification: A method is used to identify the person using the e-signature, and to indicate their intention in respect of the information communicated.
– Reliability: The identification method used is either as reliable as is appropriate in the circumstances for the purpose for which the electronic communication was generated, or satisfies the Identification Method function in (a) above, either by itself or together with further evidence.
– Consent: The counterparty to the transaction consents to the signature requirement being met by the electronic communication method used. g. by the use of a phrase such as: ‘I acknowledge that [name of party] will accept this communication as containing my signature for the purposes of the relevant electronic transactions legislation.’
There is a range of excluded cases where e-signatures cannot be legally used in Australia.
At the Federal level, more than 150 different laws are excluded (some entirely, others in relation to only specific sections) from the provisions permitting e-signatures. In particular, the entire Corporations Act is excluded from the electronic signatures provisions. As a result:
At the State and Territory level, the kinds of transactions that are excluded differ. For example,
The main commercial e-signature products on the market, such as Docusign, Hellosign and RightSignature, all claim legal validity under Australian law where e-signatures are permitted.
In a follow up paper we will provide an overview of these products from a legal validity and commercial point of view.
The introduction of e-signature technology offers real benefits for organisations in streamlining execution processes, particularly where there are large volumes of documents or numerous signatories in multiple locations.
However, an e-signature will only be sufficient to satisfy a legal requirement to sign a document if all of the requirements are satisfied. That is:
 Section 7(1) of the Electronic Transactions Act 2000 (NSW), Electronic Transactions (Victoria) Act 2000 (Vic).
 Section 9(1) of the Electronic Transactions Act 2000 (NSW), Electronic Transactions (Victoria) Act 2000 (Vic).
 Schedule1 of the Electronic Transactions Regulations 2000 (Cth).
 Section 205B of the Corporations Act 2001 (Cth).
 Regulation 6 of the Electronic Transactions (Victoria) Regulations 2010 (Vic).
 Regulation 5(f) of the Electronic Transactions Regulations 2012 (NSW).
The information above is general in nature. If you would like to learn more about the validity of e-signatures, please contact us below.