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  • Writer's pictureJosh Peterson

The low-down on e-signatures

Here's a crazy statistic-It is projected that over 100 million electronic signature transactions will be made annually in Australia by 2020, however, less than 20% of Australian businesses are currently prepared for this.

When discussions turn to digital on-boarding, there is one question that inevitably comes up-are digital signatures legal in Australia? And my inevitable answer is always yes......but!!

In Australia, the law allows nearly every document to be signed using electronic signatures. In these cases, electronic signatures are legally equivalent to their wet-ink counterparts and most businesses would benefit from their adoption.

Legal Requirements

Under the Electronic Transaction Act legislation, three requirements must be satisfied to meet their requirements:

(1) Identification Requirement: The method used to sign identifies the person who is signing and indicates an intention by them to sign that document. Electronic signature solutions will generally satisfy this requirement.

(2) Reliability Requirement: The method used to sign was reliable in light of all the circumstances. This is objectively determined with reference to a number of factors, including the type of document being signed. A wide variety of signature methods have been found to be “reliable”. For example, a simple exchange of emails has been held to satisfy this requirement. Electronic signature solutions will generally satisfy this requirement.

(3) Consent Requirement: The counterparty to the document being electronically signed has consented to the signing party signing the document by way of electronic signature. Electronic signature solutions will generally satisfy this requirement.

What documents are covered?

So what documents can be signed digitally? As it turns out, the majority of agreements used in day-to-day business, including;

(1) Sales contracts;

(2) Quotes;

(3) Nondisclosure agreements;

(4) Offer letters;

(5) Licence agreements;

(6) Statements of Work; and;

(7) Other similar agreements, are capable of being signed electronically. 

What documents aren't covered?

The ET legislation doesn't recognise certain documents, including wills, powers of attorney and documents relating to dealings with land are some examples of documents which are excluded from the operation of the ET Legislation (note: dealings in New South Wales land can be signed electronically)

It's worth noting that if a document is excluded, the general law supports the efficacy of electronic signing without the need to rely on any facilitating legislation. The general law requirements in relation to electronic signing are no more onerous than the requirements of the ET Legislation.

So what's the verdict?

Many organisations both in Oz and around the globe are transforming their businesses, replacing manual, paper-based processes with electronic alternatives that increase efficiency, reduce costs, and provide a competitive advantage.

While a simple email exchange has been shown effective in some court cases, businesses can reduce their risk by making sure they are better prepared for the challenge by taking advantage of some of the additional measures that are provided by purpose-built electronic signature solutions

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