As the world evolves into a more online digital age, the use of electronic signatures are becoming more and more prevalent, and in today’s COVID impacted marketplace, and with the assistance of relatively secure digital platforms, we anticipate that it will, become the new normative in all industries, from real estate to automotive contracts, tenders to shareholders agreements, and to solemn legal documents such as affidavits and deeds.
With the legislative solidification enabling most contracts/agreements to be signed electronically, and the advent of a number of secure encrypted digital platforms, it has allowed interstate and overseas parties to execute a Contract with relative ease – and with the current lock-downs in most states of Australia, electronic signatures has assisted to ensure that commerce continues.
WHAT IS AN ELECTRONIC SIGNATURE
An electronic signature, depending on the circumstances and the nature of the document, can include a simple check box, an email signature, an image of a signature printed out and communicated online, drawing a name or initial on an iPad or the like, or using an electronic signing platform such as e Signature, Adobe sign or Docusign.
This is in contrast to what has been known (at least in legal circles) as the “Wet Signature”, being the traditional ink and paper signature.
Some of the benefits of signing electronically include:-
- No witness is required- depending on the contract and its terms
- You can sign from anywhere where there is power and again subject to the terms of the agreement
- No more hand cramps when you are required to initial/sign every page of a 100 page Contract
- Instant, and no printing out and scanning or returning by hand
- Secure if implemented by a recognized platform that has encryption built in.
While generally a specific clause is required in a Contract to allow for an electronic signature (the latest versions of the Standard REIQ and ADL Real Estate Contracts include such a condition in their standard terms), it is not always necessary. This can be the case, when the Contract, with the consent of the parties, the execution is implemented and exchanged through an electronic systems such as DocuSign or Adobe sign – which encrypts, verifies, dates, provides a location stamp, and exchanges the document between the parties.
There is always some negatives, and that could be rushed or accidental executions (family internet sharing devices may for instance see a child accidentally sign a real estate contract), difficulty determining identification of the party executing the agreement, and finally like with Wet Signatures if someone wishes to engage in unlawful conduct it may be even more difficult to detect and or prove.
Electronic signatures, obtain validation (with some exceptions) from the various Electronic Transactions Acts implemented in each State, Territory, and by Commonwealth legislation. These statutes broadly recognise the validity of electronic transactions and the use of electronic signatures where the parties have agreed to that method.
That being said, this legislation does not go far enough and the following documents are generally still regarded as not falling within the Electronic Transaction Acts:
- Power of Attorney’s
- Statutory Declarations
With this in mind, in Queensland, under its emergency legislation, the Queensland Government introduced a temporary regulation dealing with the requirements for deeds, general powers of attorney and mortgages, and the electronic signing and remote witnessing of statutory declarations, affidavits, wills and enduring powers of attorney, which has now been extended to 30 September 2021, with further legislation, currently before the house, extending this out to 1 May 2022 (Public Health and Other Legislation (Further Extension of Expiring Provisions) Amendment Bill 2021).
While Commonwealth legislation exists that permits transactions to occur electronically (see the Electronic Transactions Act 1999 (Cth)), this legislation does not apply to the Corporations Act 2001. Thus, due to Covid-19, a number of temporary Commonwealth legislative measures were introduced to reduce ambiguity around the validity of electronic signatures in respect of Directors and Corporations. There included:
- Company officers could use electronic signatures
- Company Documents could be in electronic form
- Where more than one signatory is required, counterparts are permitted.
These expired on March 2021 and are yet to be re-introduced, leaving some confusion if directors (particularly where there is more than one director and by virtue of virtual meetings not being legislated) are properly authorised to sign corporate documents electronically.
The uncertainty arises in part from comments made the Honorable Stanley J in obiter in Bendigo and Adelaide Bank Limited v Pickard  SASC 123 which questioned the validity of split executions and electronic execution generally (that is, section 127 requires officers of a company to execute a single, static physical document).
It is our view, adopting the common law test, that an electronic signature meets the requirements under s127 of the Corporations Act 2001, and while caution needs to be applied when there are two or more directors, there are various work a rounds that are able to be deployed to satisfy the uncertainty (such as amending the constitution of the Corporation to allow electronic execution), but with that being said, we join the chorus of commentator that Legislative certainty is needed.
In summation, it is our view that electronic signatures expedite transactions, challenge traditional legislative and procedural practices (established prior to the introduction of secure digital platforms, made in part due to concerns that Wet Signatures are required for certainty and to avoid mischief), and are likely to stay and bring about different challenges for industries and individuals. On the whole, the positives outweigh the negatives and the risks involved, that is if there is caution, consideration, proper oversight, professional advice sought, and prudence being applied to the entry into a transaction/contract/deed or other document.
If you have any questions or concerns about signing a legal document with an electronic signature, please do not hesitate to contact one of our industry leading Gold Coast Solicitors on 07 5563 8970 for assistance.