eSignature Legality
in Australia
Electronic signatures (also known as e-signatures) are widely used in Australia for business transactions. All types of electronic signatures are considered equally as enforceable and accepted as traditional “wet” signatures in Australia provided that it satisfies the following three conditions:
- Identify the signatory and indicate whether they intend to sign the relevant document or transaction.
- Be either as reliable as the transaction or document to be signed requires; or be proven in fact, either alone or in combination with other evidence, to identify the signatory and their intent to sign the relevant document or transaction.
- Clearly show that the recipient to whom the signature has been provided consented to the signing method used.
The Electronic Transactions (ET) Act 1999, which applies to transactions regulated by Commonwealth laws, is the key legislation at the Commonwealth (i.e., national) level. The Electronic Transactions Regulations, 2000 stipulate certain transactions and Commonwealth legislation are exempt from the Act and hence require a traditional signature. In addition, each Australian state and territory has its own electronic transactions legislation, which largely mirrors the Commonwealth ET Act but has some exclusions that apply when a transaction is governed by the relevant State or Territory laws.
The legality of documents signed electronically has been upheld in several Australian court cases. The “reliability” condition, on the other hand, seems to have a low threshold. Hence, use of certificate-based digital signatures, such as cloud signatures, should be considered as part of the workflow risk management strategy when doing business with other jurisdictions where e-signature validity may be assessed differently or for a particular compliance requirement.
Key Conditions: Electronic signatures are considered reliable if they meet these four conditions under the Commonwealth Act and other state legislations:
Identification
The signatory has to be identified and has to indicate their intention to sign the document and/or perform the transaction.
Reliability
The method used to identify the signatory should be reliable and appropriate. The same is determined by considering all the relevant circumstances and the purpose for which such e-signatures on the document are being obtained.
Concent
The counterparty, who is receiving such e-signature consents to the requirement of document being affixed electronically and further asserts such method is appropriate and approved.
Special Considerations
There are various use cases in Australia that necessitate the use of a traditional signature. Additionally, there are a few situations when additional consideration for e-signature legal compliance is essential, such as when transacting with public sector companies or when dealing with specific state or territorial law that may apply to a specific use case or transaction.
For public sector entities
If you provide an electronic signature to a Commonwealth government department or agency, the method you choose must meet the department’s specific information security conditions, according to the Commonwealth ET Act.
Corporations’ Amendment (Meetings and Documents) Bill 2021 – An update on electronic execution of documents and virtual meetings
The Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) (Bill) was passed by the Commonwealth on February 10, 2022, establishing a permanent mechanism for companies and registered schemes to execute documents electronically, hold hybrid (in person and remote) meetings, and use technology to execute, sign, and share company and meeting-related documents
In the Corporations Act, the Bill adds a new Part 1.2AA – Signing Documents, which includes the following provisions:
- Section 110(1) - Part 1.2AA will apply to a document (including a deed) to be signed by a person exercising the powers of a company under section 126 or section 127, according to section 110(1).
- Section 110(2) - Part 1.2AA also applies to a document (including a deed) required or permitted to be signed by a person under the Corporations Act that relates to a meeting of members of a company or a registered scheme, a resolution to be considered by the directors or members of a company without a company, or a meeting of the directors
- Section 110A – which allows a person to sign an electronic version of a document using electronic means if the method of signing complies with section 110A. (2).
- Section 110B – prohibits ASIC (Australian Securities and Investments Commission) from refusing to receive or register a document that has been signed in accordance with section 110A on the grounds that it is unsigned.
This bill resolves the uncertainties around the use of technology for document execution in electronic format and virtual meetings. Companies now have clarity that the electronic and technological solutions adopted in 2020 and 2021 can be used lawfully well into the future, according to the TLA’s permanent implementation of previous mechanisms.
Australian state and territorial law
Each Australian State and Territory related legislation is as follows:
- Victoria: Electronic Transactions (Victoria) Act 2000;
- New South Wales: Electronic Transactions Act 2000;
- Queensland: Electronic Transactions (Queensland) Act 2001;
- Western Australia: Electronic Transactions Act 2011;
- South Australia: Electronic Communications Act 2000;
- Northern Territory: Electronic Transactions (Northern Territory) Act 2000;
- Tasmania: Electronic Transactions Act 2000; and
- Australian Capital Territory: Electronic Transactions Act 2001.
Regulations in several States and Territories, which are similar to the Commonwealth ET Act, specify which transactions and laws are exempt from the State or Territory’s electronic transactions legislation. Moreover, types of exemptions granted in each State or Territory varies.
The main regulations are:
- Victoria: Electronic Transactions (Victoria) Regulations 2010;
- New South Wales: Electronic Transactions Regulation 2017;
- Western Australia: Electronic Transactions Regulations 2012;
- South Australia: Electronic Transactions Regulations 2017;
- Northern Territory: Electronic Transactions (Northern Territory) Regulations 2001;and
- Tasmania: Transactions Regulations 2011.
Documents that can be electronically signed
Electronic signatures are commonly accepted for the following types of transactions:
- HR
- Procurement
- NDAs (provided it is an agreement not a deed)
- Software licensing
- Healthcare
- Insurance
- Education
- Technology sector; and
- Documents to be recorded, though it depends on where they are to be recorded.
Further, although the use of electronic signatures for the below-mentioned transaction types is not prohibited, caution should be exercised before using electronic signatures for the following transactions:
- Corporate Resolutions
- Banking
- Lending
- Chattel Paper
- Consumer Transactions
- Government Filings
- Real Estate; and
- Documents to be Notarized
Enforceability of electronically signed document:
Some practical considerations for improving the enforceability of an electronically signed document include:
- Converting documents to agreements (by reviewing the wording of the document and necessitating consideration) where they are not required to be in the form of a deed.
- Requiring the parties to mutually consent to (and maintaining evidence of such consensus)
- the use of electronic communication to comply with statutory information-giving requirements
- the use of electronic signatures in the contract's execution; and
- When one of the parties is a corporation, include the following clause in the agreement
- The signer's warranty that they are duly authorized to electronically sign the contract; and
- A condition requiring, if requested, evidence of authority to execute the contract be provided within a certain period.
DISCLAIMER:
Certinal is making available the information and materials in this article for informational purposes only and is meant to help companies understand eSignature’s application in a legal framework. Laws change rapidly and Certinal makes every reasonable effort to keep the content of this article current, hence Certinal makes no claims or representations that the information contained in this article is true, accurate, correct, or current. The law is different from jurisdiction to jurisdiction, and even similar laws may be interpreted differently in different courts or in different places. Since these factors differ according to individuals and businesses, Certinal is not liable for any consequence of any action taken by any third party relying on material/ information provided under this article. The contents hereof should not be construed as legal advice in any manner whatsoever. In cases you require any assistance; you must seek independent legal advice.
