In Australia, the use of electronic signatures in digital commerce is governed by the following legislation, specific to the following jurisdictions:
|Act & Regulation||Jurisdiction|
|Electronic Transactions Act 1999 (Cth) Electronic Transactions Regulations 2000 (Cth)||Federal|
|Electronic Transactions Act 2001 (Qld)||Queensland|
|Electronic Transactions Act 2000 (NSW) Electronic Transactions Regulation 2001 (NSW)||New South Wales|
|Electronic Transactions Act 2001 (ACT)||Australian Capital Territory|
|Electronic Transactions Act 2000 (NT) Electronic Transactions Regulations 2000 (NT)||Northern Territory|
|Electronic Transactions Act 2000 (SA) Electronic Transactions Regulations 2002 (SA)||South Australia|
|Electronic Transactions Act 2000 (Vic) Electronic Transactions Regulations 2010 (Vic)||Victoria|
|Electronic Transactions Act 2000 (Tas) Electronic Transactions Regulations 2011 (Tas)||Tasmania|
|Electronic Transactions Act 2011 (WA) Electronic Transactions Regulations 2012 (WA)||Western Australia|
The Electronic Transaction Acts (ETAs) and Electronic Transactions Regulations (ETRs) apply to all laws of the relevant jurisdiction (e.g. contract law), subject to specific exceptions listed therein and the satisfaction of elements to create a legally binding signature.
What constitutes an electronic communication?
Electronic communication is a communication of information in the form of data, text, images, or speech through guided or unguided electromagnetic energy. A transaction, subject to the ETAs and ETRs, encapsulates a wide range of exchanges of information including dealings connected to the formation and performance of a contract and includes a transaction of a non-commercial nature.
Formaliti functions that constitute an electronic communication include:
- Inserting a scanned copy of a signature into a document;
- Signing a signature into a panel by use of a trackpad or cursor constitutes an electronic communication.
What criteria must you satisfy to obtain a legally valid electronic signature?
According to the ETAs, a transaction is not invalid because it took place wholly or partly using one or more electronic communications provided that the following general requirements are met:
- Identification: The electronic communication method must provide a means to determine the identity of the electronic signatory. This can be conducted by the party issuing the document for signature.
- Intention: The electronic communication method must provide a means by which the electronic signatory indicates their intention or approval of the content of the document and/or transaction.
- Reliability: The means of determining the identity and intention of the electronic signatory (above criteria) must be either:
- As reliable as appropriate (in the circumstances for which the electronic communication was generated or communicated) in the light of all the circumstances, including any relevant agreement; or
- Proven in fact to have fulfilled the functions described in element 3.a above, by itself or together with further evidence.
- Consent: The electronic recipient has consented to the use of the electronic communication method. (Consent does not have to be explicit and can be inferred from a person’s conduct.)
What are the exceptions to electronic signatures?
It is important to note that some documents cannot be signed by the parties electronically and thus, will not be legally binding if executed through Formaliti.
These documents are excluded from the application of the ETAs and vary across the different Australian jurisdictions.
Some notable exceptions may be (but are not limited to):
- Mortgage documents;
- Statutory declarations;
- Powers of Attorney;
- Court documents and documents associated with legal proceedings;
- Some documents relating to property transactions;
- Documents which must be personally served;
- Documents which must be executed by a company according to the Corporations Act 2001;
- Documents which require witnesses;
- Land titles office documents;
- Certain documents relating to health, life and general insurance;
- Documents relating to the provision of credit services under the National Consumer Credit Protection Act 2009;
- Official Federal documents.
The above list is by no means all-inclusive or applicable to all Australian jurisdictions. You should refer to the specific ETA and ETR relevant to your jurisdiction, to consider whether or not your document is excluded from being able to executed electronically and whether legislation now includes any documents mentioned above.
What does this mean?
If you wish for a party to sign a document electronically and you wish for that document to be legally binding, you will need to consider the following:
- The jurisdiction – What law will apply to the document and transaction?
- The transaction – Is the legal requirement excluded from the applicable ETA and ETR?
- The method used – does it satisfy the Identity and Reliability criteria? Does it illustrate Intention?
- The signatories – do the parties consent to the method used, sufficient to satisfy the
If all of the above considerations are satisfied, the electronic signature will bind the parties.
In providing your document for use on the Formaliti System, you should consider whether the content of your document meets the above criterium.
You should consider inserting the following into your documents:
- A means to identify the electronic signatory, to satisfy the Identification criterion.
- A clause in your document which provides that the electronic signatory “intends to be bound by the terms and conditions of the document” to satisfy the Intention criterion.
- a clause in your document which provides that the recipient “consents to the use of the Formaliti electronic communication method” to satisfy the Consent criterion.
Please do note that this is a developing area of law which has seen significant change over recent years. We suspect that changes will continue to occur.
DISCLAIMER: The content of this document is intended only to provide a summary and general overview on matters of interest. It is not intended to constitute legal advice. Any use of this information will be at your own risk, and you should seek legal or other professional advice before acting or relying upon any information contained in this document. The legal information contained in this document is provided without any representations and warranties, whether express or implied.