Electronic signatures

08 July 2016

A sign of the times

Business / Franchise Sale & Purchase, Trade Marks

New South Wales

Asked

Can Docusign be used to form a legally binding contract for agreements with contractors, clients, proposal documents and terms of business with clients?

Should the signer be asked to confirm, by way of a disclosure form etc, that they are who they say they are?

Answered

Thanks for the question.

This is an extract from our commentary on the issue - found in the Sale and Purchase of Real Property guides:

The common law recognises electronic signatures, but the Electronic Transactions Act 2000 (as enacted throughout Australia) puts beyond doubt that electronic signatures are equivalent to traditional hardcopy signatures.

More specifically, the Act provides that a legal requirement for a manual signature can be satisfied with an electronic signature if a reliable method is in place to identify the person and to indicate that the person has approved the information that has been communicated.

The reliable method for evidencing the identity of the signatory and their intention to sign electronically is provided by their solicitor’s confirmation that the party has signed electronically and intends to be bound by the contract. Likewise an authority signed electronically for an agent to sign on the party’s behalf will satisfy the requirements of the relevant conveyancing Acts.

In summary, it is the intention of the signatory to create legal relations indicated by placing their mark on a document that gives a signature its legal character or functionality, not the mark itself. As a matter of interest, a signature has five functions that point to intent rather than the form of the signature. They are an evidentiary function, a cautionary function in that a signatory deliberates before signing, a function of a reliable true record, a function that establishes the mark as one of legal significance and a compliance function.

The option of exchanging electronically signed contracts is still novel in practice. However, the legalities and procedures are worth knowing, particularly when parties or their solicitors are confronted with tight deadlines or distance causing problematic delays that electronic signing can easily overcome.

Section 9 of the Electronic Transactions Act 2000 states that the requirement of any law for a signature is taken to have been met in relation to an electronic communication if:

(a) the signature identifies the person and indicates approval of the information;

(b) the method of communication was appropriate in the circumstances; and

Regards

Mentor