With many businesses now adopting electronic methods in conducting their businesses, eSignatures are a popular tool to simplify and streamline processes. The Government recognises the impact technology has on business practices and enacted the Electronic Transactions Act 1999 (Cth). This article discusses whether eSignatures are legally binding, and what requirements you need to make them so.
eSignatures
eSignatures are signatures on an electronic document or transaction. Under Australian Law, an eSignature has the same effect as a handwritten signature. As a result, a person is bound by an agreement or contract if it is signed electronically.
Are they legally binding?
Yes they are. The Electronic Transactions Act 1999 (Cth) governs the usage of eSignature in transactions. The Act provides certainty for electronic transactions and allows electronic commerce to work in the same way as paper-based commerce.
Traditionally, for a contract to form, the requirements of offer and acceptance, consideration, and intention to create legal relations must be met. An eSignature satisfies all these elements and is therefore treated like a handwritten signature. Thus, eSignatures are binding and a valid way to execute a contract or agreement online.
However, it is important to note that there are additional requirements that must be met. This includes that the agreement or contract signed must be stored online and accessible at anytime. There must also be consent by the parties that expressly or impliedly accepts that all communications between them will be online. Furthermore, there are exemptions in the Act that prohibits the use of eSignatures in certain cases. These include documents which relate to migration, powers of attorney, and wills.
eSignature tools
The Electronic Transactions Act is “technologically neutral”. Therefore, it does not define the parameters of what eSignature tools can be used. As a business or an individual, you can use whichever tool suits your needs and there are many sophisticated tools you can use online for free.
Final Thoughts
Under Australian law, eSignatures are legally binding, subject to some exemptions. The law interprets them to be the same as handwritten signatures. However, there must be consent between the parties for it to be enforceable. Subsequently, the Electronic Transactions Act provides flexibility and neutrality as to what tools you can use. For further information on the legalities surround electronic signatures, it may be worth contacting a business lawyer.
