Are electronic signatures legally valid in Australia?

Business Law: 08 December 2022

The rise of various digital platforms and software offering digital signatures has forced governments to update the laws around their use. In most instances, so long as certain minimum standards are met, they are legally valid and binding.

Electronic Transactions Acts

All Australian jurisdictions have enacted largely uniform Electronic Transactions Acts (ETAs). The principal purposes of these Acts include to:

• facilitate the use of electronic transactions;
• promote business and community confidence in the use of electronic transactions;
• codify the general principle that transactions are not invalid simply because they take place wholly or partly by means of electronic communications or rely on electronic signatures; and
• clarify the traditional rules of contract formation in the context of electronic communications, including the recognition of automated message systems, clarification of an invitation to treat and rules to determine the location of the parties.

The Commonwealth ETA applies only to transactions to which a Commonwealth law applies. The State and Territory Acts apply in their respective jurisdictions. They do not apply to all legislation or transactions. Each ETA or the Regulations made under it lists legislation or types of transactions that are exempt from the Act. For example:

• the Commonwealth ETA does not apply to the Corporations Act 2001 (Cth) ; and
• in Victoria, advance care directives and arrangements in relation to voluntary assisted dying cannot be signed electronically or be witnessed over audio visual link

Electronic signatures

In general terms, an electronic signature will be deemed to be effective under an ETA if the following conditions are satisfied:

• identity: the person must use a method to identify themselves and indicate their intention in respect of the information communicated;
  • an electronic signature accompanied by the signatory's name would satisfy this requirement
• reliability: the method of identification must be reliable as appropriate for the purpose for which the communication was generated
  • document sent from the signatory's personal email address or software is used which requires a password or authentication before a digital signature is inserted; and
• consent: the person to whom the signature must be given consents to the use of electronic communication to fulfil the requirement for a signature. The Victorian ETA provides that consent must not be withheld without sufficient cause.

Cloud-based signature platforms such as DocuSign would be considered to satisfy the identification, reliability and consent requirements.

Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic) (Act)

On 26 April 2021, the temporary measures permitting electronic execution and remote witnessing of transactions under the Victorian ETA, as well as statutory declarations, powers of attorney and wills, previously introduced in response to COVID-19, were made permanent. The Act also made permanent measures that expanded the categories of documents that can be electronically executed and permitted split executions under the ETA.

The amendments made by the Act included:

• providing for deeds to be electronically created and to be "signed, sealed and delivered- thereby overriding the common law requirement that a deed be on "paper, parchment or vellum€;
• allowing deeds to be treated as 'transaction' for the purposes of the ETA - along with the existing categories of documents, namely:
  • contracts or other types of agreement or arrangements;
  • any statement, declaration, demand, notice or request that the parties must make in relation to the formation or performance of a contract, agreement or other arrangements; and
  • any transaction of a non-commercial nature.
• Clarifying that a mortgage can be in electronic form and allowing mortgages to be treated as a 'transaction'

The Act includes an express acknowledgement that these amendments do not otherwise interfere with other laws applying to deeds or mortgages, whether in any other Acts or the common law, including the law of misrepresentation, unconscionability, undue influence or duress.

Witnessing by audio-visual link

The Act also provides for witnessing by audio-visual link. The following requirements must be satisfied:

• the witness observes the signatory sign the document;
• the witness is reasonably satisfied that the document they sign is the same;
• all requirements for witnessing occur on the same day;
• any other prescribed requirements that apply to a particular document are also met;
• the witness includes a statement that all requirements of witnessing by audio-visual link have been met.

An example of this statement is:

The requirements for witnessing by audio-visual link under section 12 of the Electronic Transactions (Victoria) Act 2000 have been met.

A witness does not need to be physically located within Victoria unless they are otherwise required to be by another applicable Victorian law. For example, under the Wills Act 1997 and the Powers of Attorney Act 2014, the witness (and all other participants) must be located in Victoria during the witnessing process.

The procedures for witnessing by an audio-visual link in other legislation (e.g. The Oaths and Affirmations Act 2018, the Wills Act 1997 and the Powers of Attorney Act 2014) take precedence over the general witnessing provisions in the ETA.

Corporations Act 2001 (Cth)

The Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (CA Act) made permanent the temporary relief measures allowing electronic signing and split execution of documents under s.127 of the Corporations Act (effective 23 February 2022).

Electronic execution and split executions (either with wet ink or electronic signature) are permitted. Electronic execution is also expressly allowed where an individual signs as an agent for the company under s.126.

Deeds may be in electronic form and signed electronically under s.127 or through and authorised agent under s.126 The appointment of an individual agent to sign a deed does not need to be by a deed. Delivery is not necessary if a company executes a document as a deed.

Witnessing of the affixation of a common seal can be done remotely. - but witnessing is not otherwise required under the Corporations Act.

Proprietary companies with a sole director and no company secretary can now execute documents under s.127, and a person may make assumptions about due execution under s. 129(5) and (6), where the signatory is the sole director (and there is no company secretary).

For further information, please contact John McCombe on 03 8600 6009 or jmccombe@aitken.com.au

References

Electronic Transactions Regulations 2020 Electronic Transactions (Victoria) Regulations 2020