When it comes to modern digital technology, Australians have a seemingly avid appetite. According to a study conducted by P&S Market Research, Australia is one of the rapidly emerging markets for e-signature usage. The study also forecasts that global e-sign market will experience a substantial growth of 39.2% annually between 2016 and 2020.
However, as more Australians add esignatures to their digital processes, a lot of them are hesitant about the law. Are electronic signatures legally binding? What handy steps should an Australian business take when electronically signing a document?
Validity of electronic signatures in Australia
The use of any signature, may it be a wet-ink or electronic signature, is to show intent in regards to the information contained in a document. The use of electronic signatures in Australia is usually governed by state and Federal legislation – the federal law being the Electronic Transaction Act 1999, while its counterpart state and territory act applies to different respective jurisdictions.
The general rule according to these legislations is that: a transaction is not illegal just because it was executed partly or wholly using electronic communication. Notably, a legal prerequisite for an electronic signature is fully met if the following conditions are fulfilled.
- There is a way of identifying the person executing the sign and their real intention. A simple illustration is where a company manager uses an e-sign to complete a document. Their unique signature identifies them as the manager, and the content in the document shows their intention of signing the document.
- The method is reliable. The process used in executing the signature must be reliable to prevent forgery or any manipulation. Electronic signature solutions that use technology which thwarts acts of forgery or digital manipulation, such as eSign Genie, adds considerable weight to the credibility of the method used.
- The relying party must consent to the method used. The counter-party to the document being signed electronically must accept the method used. Consent can be established essentially on the basis that a company has previously accepted e signatures or that, for instance, the parties transacting consent that the said document will be signed online.
Uniform electronic transactions in the states and territories
Besides the federal law, every state and territory in Australia is guided by its own Electronic Transactions Act, which normally mirrors the Commonwealth Electronic Transactions Act. Therefore, if you wish to know if you can electronically sign documents in a certain state or territory, it is advisable to check the electronic transactions legislation pertinent to that state or territory: Below are the state and territory legislation;
- Australian Capital Territory -Electronic Transactions Act 2001
- Australia, VIC – Electronic Transactions (Victoria) Act 2000
- Australia, New SouthWales (NSW) – Electronic Transactions Act 2000
- Australia, WA – Electronic Transactions Act 2003
- Australia, Northern Territory (NT) – Electronic Transactions Act 2000
- Australia, QLD – Electronic Transactions (Queensland) Act 2001
- Australia, SA – Electronic Transactions Act 2000
- Australia, Tasmania – Electronic Transactions Act 2000
Documents that can be electronically signed in Australia
Most agreements and contracts can be electronically signed in Australia. In practice, they include key documents used in normal day-to-day activities, such as;
- Non Disclosure Agreements (NDAs)
- Sales contracts
- Statement of Work
- HR documents, such as new employee onboarding contracts
- License agreements
- Offer letters
- Other similar agreements
Cases where e signatures are invalid in Australia
By law, certain types of documents still require being signed with the typical wet-ink signature. However, it is anticipated that with time, these exemptions will narrow to contain the rising use of e-signs in business transactions. You may not sign the following electronically in Australia.
- Powers of attorney is some States and Territories
- Statutory declarations that need a witness
- Bills of exchange
- Some documents under laws relating to life insurance, general insurance, and health insurance
- Codicils, wills, and other testamentary instruments
- The signature and executing of documents touching on legal proceedings in some States and Territories
- Documents involved in transfers of intangible property like intellectual property
- Official commonwealth documents like passports
- Certain property transactions in South Australia
- Some notices, consents, and documents used about the provision of credit services falling under the National Consumer Credit Protection Act 2009.
Key considerations when signing documents electronically in Australia
1. Documents that require to be registered
While it may be okay for some documents which require to be registered with a 3rd party to be electronically signed, this does not imply that they will automatically be admitted for registration of that nature. In such circumstances, it is always advisable to confirm with the registering authority to make sure that it will admit a document signed electronically.
2. Documents that need to be witnessed
There are some discrepancies concerning the ET legislation as to whether a document may be witnessed for e signature. The general law concerning the electronic witnessing of documents is much untested. Therefore, it is recommended that you get pertinent legal advice if you wish to use e-signs to witness documents.
3. Documents signed in regards to the Corporation Act 2001
The Commonwealth ET laws are not applicable to the corporation’s Act. In fact, the facilitating procedures defined in the Corporation Act about the signing of a document by a company based in Australian are very different from the ET laws. This does not, however, disqualify an Australian company from electronically signing other types of documents.
Organizations around the globe are transforming their operations, replacing labor-intensive, paper-based procedures with electronic alternatives which reduce costs, increase efficiency, and present a competitive advantage. Digital signatures, therefore, can provide immeasurable benefits, and Australian law has been crafted to encourage this transition.
At eSign Genie we are aware of the laws relating to e signatures around the world. Most importantly, we are well equipped to offer services for e-signs in the U.S. Canada, Europe, India, and yes, Australia and many more countries. In short, if you are based in Australia and your organization is yearning to make electronic signatures and start signing documents online, then you are in the right place. We will ensure that your e signatures are compliant with Australian law.
DISCLAIMER: The information in this eSign Genie blog is for general purposes only and is not meant for companies to use as legal advice. Please confer with your attorney for legal consultation for your location and specific use cases.