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A simple guide to using e-signatures in Australia

21 April 2020

The business case for using e-signatures in Australia is a simple and convincing one - they save costs, time, are easier to complete and they are valid. 

E-signatures are valid in Australia because of the Electronic Transactions Act 1999 (Cth).

In a hurry? You can jump ahead below. 

Electronic Transactions Act purpose 

The Electronic Transactions Act 1999 (Cth) is the reason why  electronic transactions are possible; this legislation promotes confidence in the use of electronic transactions. 

Below is a guide for how to use e-signatures in Australia. 

E-signature requirements

You'll need identification, reliability and consent to use an e-signature: : s. 10 Electronic Transactions Act 1999 (Cth). 

We'll go through these below.

Identification

A person’s signature will be valid if there’s a method that’s used to identify the person and to indicate their intention.

Reliability

The method used to identify a person must be reliable. 

To meet this requirement, signature software providers like HelloSign ask the person signing to enter their email address, this email address identifies the person that’s e-signing and satisfies the reliability criteria.

Consent

The person you are sending the e-signature to must consent to receiving it. This will not be difficult where you have received a request via an e-signature platform from the person who will be receiving your e-signed document.

Time of signature 

Generally, the time of the signature is taken to be the time when both of these events occur:

  • the recipient receives the signed document; and
  •  becomes aware that the e-signed document has been sent to them: s. 14A Electronic Transactions Act 1999 (Cth).

When to use e-signatures

You can use electronic signatures on a range of documents, below are some examples: 

  • customer order forms
  • client agreements
  • NDA’s
  • sales agreements; and
  • terms and conditions of sale 

When to avoid e-signatures

You should avoid using electronic signatures in these cases: 

  • where a document requires a witness to your signature 
  • any deed regardless of your state - you can read about signing deeds here.
  • powers of attorney 
  • wills, codicils and other testamentary instruments (they are excluded from the Electronic Transactions Act and must be notorised per the Succession Act 2006 (NSW).
  • filing of certain documents for legal proceedings in certain states and territories
  • certain documents for credit related services per the Consumer Credit Protection Act 2009 (Cth); and
  • official Commonwealth documents like passports. 

Why deeds should not be e-signed

While we’ve gone through signing deeds in detail here, below are the common objections from lawyers about certain formalities not being met:

  • witness - you need a witness for deed execution; and
  • paper - a deed must be printed on paper, parchment or vellum. While many argue that a soft copy deed may not meet this requirement, others argue if it's printed later, the common law requirement for paper is satisfied. 

My opinion - even if there is a common law argument, its best to avoid the legal headache and avoid e-signatures for deeds.

Addressing lawyers objections (based on the Corporations Act) 

Below is what section 127 of the Corporations Act 2001 (Cth) says about director signatures.

CORPORATIONS ACT 2001 - SECT 127

Execution of documents (including deeds) by the company itself

(1) A company may execute a document without using a common seal if the document is signed by:

(a) 2 directors of the company; or
(b) a director and a company secretary of the company; or
(c) for a proprietary company that has a sole director who is also the sole company secretary—that director.

(2) A company with a common seal may execute a document if the seal is fixed to the document and the fixing of the seal is witnessed by:

(a) 2 directors of the company; or
(b) a director and a company secretary of the company; or
(c) for a proprietary company that has a sole director who is also the sole company secretary—that director.

(3) A company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2). 

(4) This section does not limit the ways in which a company may execute a document (including a deed).

Some lawyers are apprehensive about e-signatures because of [2] above; they picture a paper document that has a seal affixed to it so assume that [1] above is also referring to paper. 

For the lawyers that are apprehensive, you may agree upfront with them:

  • a document may be e-signed under section 127; and
  • that you will print the document after its e-signed.

 Below we cover situations where an agent signs on a company's behalf.

Agents

Below is what the Corporations Act says about agents signing on behalf of directors, for example, when a director delegates to a worker signing on their behalf. 

CORPORATIONS ACT 2001 - SECT 126

Agent exercising a company's power to make contracts

(1) A company's power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the company's express or implied authority and on behalf of the company. The power may be exercised without using a common seal. (2) This section does not affect the operation of a law that requires a particular procedure to be complied with in relation to the contract.

The principal should confirm with the other party that an agent will e-sign on their behalf and this should eliminate the concern about identity and consent criteria being met.

Where to sign

Below are some approaches that lawyers take for signing legal documents. Be sure to agree upfront the other party's preference. 

Option 2 is more practical for longer documents with multiple attachments. 

Option 1 

Sign every page and witness some pages. 

Option 2

Sign some pages as indicated, and for annexures, sign the first and last page of each annexure.

Key e-signature tips

Below are some key tips for using e-signatures: 

  • agree with the other party to use e-signatures
  • notify the other party if an agent will be e-signing (not the director(s);
  • agree the pages to be signed e.g. all pages or as indicated + first and last pages of each annexure.

As always, get advice if you are ever in doubt about how to use e-signatures.

Do you have questions or comments about using e-signatures? Be sure to leave them below. 


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Vivian Michael
 

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to deliver the best quality business legal services to entrepreneurs launching an Australian business, wherever they are in the globe.

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