ELECTRONIC SIGNATURES – WHEN IS IT SAFE TO SIGN ELECTRONICALLY?

ELECTRONIC SIGNATURES – WHEN IS IT SAFE TO SIGN ELECTRONICALLY?

As the world around us evolves, electronic signatures are becoming more and more frequent. However, some industries haven’t progressed towards the future of electronics yet and don’t find signing electronically safe for some documents.

One of the first pro forma legal documents in Queensland to be able to be signed electronically was a Contract of Sale. By allowing Contracts to be signed electronically, it has allowed interstate and overseas parties to execute a Contract with relative ease. While a clause is required in the Contract to allow for an electronic signature (Standard REIQ and ADL Contracts include such condition in their standard terms), the majority of Contracts are set up to be executed through a system called DocuSign, which date and provides a location stamp as a signature. Some of the benefits of signing electronically include:-

  • No witness is required
  • You can sign from anywhere in the world
  • No more hand cramps when you are required to initial/sign every page of a 100 page Contract

Whilst signing electronically gives people the opportunity to sign from anywhere, there are some downfalls. For example, identity theft is becoming more common, which means signing electronically makes it hard for professionals to identify the signatory, and thus puts transactions at risk of fraudulent activity. As computers are often used by family members and not necessarily secured, you could find that a document has been accidently signed by another family member, and due to automation sent to the other side, locking you into a contract with serious financial consequences.

Electronic signatures get additional validation from the relevant Electronic Transactions Acts.

An electronic signature to be deemed effective under the Electronic Transactions Acts, the following conditions are required to be satisfied:

1. Identity

The person must use a method to identify themselves and indicate their intention.

2. Reliability

The method of identification must be as reliable as appropriate considering the purpose of the communication.

3. Consent

The person to whom the signature is given must consent to the use of electronic communication to fulfil the requirement for a signature and to the method of identification.

Compared to a Contract of Sale, there are other legal documents which require a qualified or non-qualified witness, which doesn’t allow for the document to be signed with an electronic signature. The following documents are some of the few that are generally still required to be signed with a physical or as some refer to a ‘wet’ signature:-

  • Wills
  • Power of Attorney’s
  • Affidavits
  • Statutory Declarations
  • Deeds
  • Transfer of Land Forms
  • Other Land Title documents.

That being said, In Australia, ‘wet ink’ signatures and electronic signatures are now generally recognized at law as being allowed on all documents, subject to consent, witness requirements, and legislative requirements, but it should be said there remains ambiguity around what is allowed and what is not.

There has also been instances which have caught people out who probably did not believe that they were signing or agreeing to a document as they were using an electronic device. Ergo, In the judgment of Justice Harrison in Stuart v Hishon [2013] NSWSC 766: it was found that an email was a signature – “Mr Stuart typed his name on the foot of the email. He signed it by doing so. It would be an almost lethal assault on common sense to take any other view.”

Keeping in mind the positive and negatives of signing electronically, if you don’t feel comfortable signing with an electronic or digital signature, you are generally not obligated, thus until such time that it is mandated that documents are signed electronically, you have the luxury to decide for yourself but the future is upon us and wet signatures are likely to be less the norm in this Covid impacted world.

If you have any questions or concerns about signing a legal document with an electronic signature, contact our Gold Coast Solicitors on 07 5563 8970 for assistance.