Electronic Signature Law
Electronic Signature Law
The introduction of Electronic Transactions Legislation has made it easier to comply with statutory requirements to sign and produce documents, provide written information, and store records. The legislation allows electronic communications (eg emails) and electronic records to be used in place of paper in a range of circumstances. Formaliti has been engineered in accordance with the Electronic Transactions Act 1999. The law outlines four main requirements for a legally-valid electronic transaction in Australia.
A sufficient method to identify the signer. This need not be onerous and just as you identify a person signing a form sitting with you, similar acceptance is given to identifying a signer in an electronic transaction. It can be as simple as an email address or you physically sighting a person’s identifying documents.
The electronic communication method must provide a means by which the electronic signatory indicates their intention or approval of the content of the document and/or transaction. Formaliti does this through the acceptance of e-signing terms and conditions before a document can be submitted.
Identification of the signer (criterion 1 above), indication of the intention to comply (criterion 2 above) and the means of encrypted storage and transport of data guarantee that reliability of each transaction is upheld.
The persons both receiving and signing the document have consented to the use of an e-signature. Formaliti requires that the signer accepts e-sign consent terms and conditions and that the sender accepts the the document all parties give final consent to adopting any changes to a document.
Is it legal to use Electronic Signatures?
In short, yes they are legal to use. According to Australian and international law, electronic signatures are a valid way of executing agreements, however, not all instances are accepted or binding. (see link below to several countries’ electronic communications laws and Australian Law here in section 10 (signatures) of the Electronic Transactions Act.). Within Australia the general rule for use of Electronic Signatures is that no transaction will be invalid simply because it was completed electronically. However, there is not a one size fits all approach to e-signatures, with some legal documents having additional requirements, such as being witnessed, which can add complexities to the signing process. Some types of documents will also have a requirement that the signatures are handwritten in order to make the agreement binding.
Considerations for Real Estate
Each Australian state and territory, as well as the Commonwealth, has its own electronic transactions legislation. Your Real Estate Industry Body should be able to inform you if that state is able to accept Electronic Signatures in relation to Real Estate documents. While a state may allow for the use of electronic signatures, certain types of transactions may be excluded and hard copy signatures will be required on paper. Documents where E-Signing is now practiced include:
- Sales contracts
- Housing agreements
- Non Disclosure Agreements
- Changes / Alterations to Leases
Electronic Signature Legality in Australia
In Australia, the use of electronic signatures in digital commerce is governed by the following legislation, specific to the following jurisdictions:
|Act & Regulation (if applicable)||Jurisdiction|
|Electronic Transactions Act 1999 (Cth) Electronic Transactions Regulations 2000 (Cth)||Federal|
|Electronic Transactions Act 2001 (Qld)||Queensland|
|Electronic Transactions Act 2000 (NSW) Electronic Transactions Regulation 2001 (NSW)||New South Wales|
|Electronic Transactions Act 2001 (ACT)||Australian Capital Territory|
|Electronic Transactions Act 2000 (NT) Electronic Transactions Regulations 2000 (NT)||Northern Territory|
|Electronic Transactions Act 2000 (SA) Electronic Transactions Regulations 2002 (SA)||South Australia|
|Electronic Transactions Act 2000 (Vic) Electronic Transactions Regulations 2010 (Vic)||Victoria|
|Electronic Transactions Act 2000 (Tas) Electronic Transactions Regulations 2011 (Tas)||Tasmania|
|Electronic Transactions Act 2011 (WA) Electronic Transactions Regulations 2012 (WA)||Western Australia|
(“the ETAs” and “the ETRs” respectively) The ETAs and ETRs apply to all laws of the relevant jurisdiction (e.g. contract law), subject to specific exceptions listed therein and the satisfaction of elements to create a legally binding signature.
What constitutes an electronic communication?
An electronic communication is a communication of information in the form of data, text or images or in the form of speech by means of guided and/or unguided electromagnetic energy. A transaction, subject to the ETAs and ETRs, encapsulates a wide range of exchanges of information including dealings connected to the formation and performance of a contract and includes a transaction of a non-commercial nature. The execution of a document using the
- inserting a scanned copy of a signature into a document; or
- signing a signature into a panel by use of a trackpad or cursor, may constitute an electronic communication.
What criteria must you satisfy to obtain a legally valid electronic signature?
Pursuant to the ETAs, generally a transaction is not invalid because it took place wholly or partly by means of one or more electronic communications provided that the following general requirements are met: 1. Identification: The electronic communication method must provide a means to determine the identity of the electronic signatory. This does not have to be onerous and can be conducted by the party issuing the document for signature. 2. Intention: The electronic communication method must provide a means by which the electronic signatory indicates their intention or approval of the content of the document and/or transaction. 3. Reliability: The means of determining the identity of the electronic signatory (criterion 1 above) and the means by which the electronic signatory indicates their intention or approval of the content of the document and/or transaction (criterion 2 above) must be either:
a) as reliable as appropriate (in the circumstances for which the electronic communication was generated or communicated) in the light of all the circumstances, including any relevant agreement; or
b) proven in fact to have fulfilled the functions described in element 3.a above, by itself or together with further evidence; and
4. Consent: The electronic recipient has consented to the use of the electronic communication method.
It is only a matter of time before most businesses move to electronic signatures, however, if you are going to provide your documents to Formaliti for use on the Formaliti System, you should seek independent legal counsel. If you wish for a party to sign a document electronically and you wish for that document to be legally binding, you may wish to consider the following:
- The method of attaching an electronic signature to a document was reliable, secure and fit for purpose in the context of the legal document; and
- You are able to identify the person who has signed and can provide evidence that they knew and agreed to the documentation they have signed.
- The jurisdiction applies to the document and/or transaction.
- The transaction satisfies the legal requirement and that it is not excluded from the applicable ETA and ETR.
- The signatories consent to the electronic signing method and there is a clause in your document or in the process of signing that provides that opportunity for the signatory to do that.
- There a clause in your document or a method in the signing process which provides that the electronic signatory “intends to be bound by the terms and conditions of the document” to satisfy the Intention criterion.
There are obviously a number of operational, risk and other factors to be considered when deciding whether to use electronic communications and records. The ETA and ETR provisions mentioned above do not mandate the use of electronic communications and records, they simply provide organisations with the option of using them. Please do note that this is a developing area of