In the modern business world, the use of email, virtual meeting platforms, and electronic commerce are an essential part of daily life, particularly in the context of COVID-19 where remote working arrangements have become the norm for many. With many workplaces going paperless and business partners spread across the country or even globe, the idea of printing out and circulating documents for signing can be a massive inconvenience. When it comes to important agreements and contracts, knowledge of electronic signing rules is crucial to help you understand your obligations and how to best defend your interests.

This article will provide an overview of the current rules around electronic signing, covering:

  1. Signing under the Electronic Transactions (Queensland) Act 2001 (Qld);
  2. Recent changes to signing under the Corporations Act 2001 (Cth)
  3. Exceptions – where electronic signing is currently prohibited; and
  4. Tips for managing the risks of electronic signatures.

Electronic Transactions Act

The Electronic Transactions (Queensland) Act 2001 (Qld) (“the ETQA”) is the key legislation which governs electronic commerce in Queensland. As a starting point, section 8 of the ETQA states that no transaction is invalid just because it took placing using electronic communications. The ETQA also outlines the criteria for what constitutes an electronic signature, which are:

  1. A method is used to identify the person signing and to indicate that their intention in relation to the information communicated;
  2. The method used was reliable or proven in fact to fulfill criteria 1; and
  3. The signing party consents to using an electronic signature.

Adherence to these rules is vitally important when entering into agreements where a signature is required by law, such as contracts for the sale of land and consumer credit contracts.

Under these rules, the following have been found to constitute an electronic signature:

  1. An email footer containing an automatic email signature;
  2. An unsigned document attached to an email which indicates assent;
  3. Clicking to tick a box on a website.

Signing under the Corporations Act 2001 (Cth)

From August 2021, two key changes have been made to electronic signing under section 127 of the Corporations Act 2001 (Cth):

  1. Documents can now be electronically signed by directors on behalf of the company provided that:
  2. The rules outlined above in relation to electronic signatures are met; and
  3. Each copy or counterpart of the document includes the entire contents of the document.
  4. Documents can now be executed using a common seal where the placement of the seal is witnessed by electronic means (e.g., Zoom).

Exceptions – where electronic signing is generally prohibited

Temporary allowances enacted by the Queensland government in the Justice Legislation (COVID-19 Emergency Response—Documents and Oaths) Regulation 2020 (Qld), allow for the electronic signing and witnessing of:

  1. Mortgages;
  2. Deeds;
  3. Statutory declarations; and
  4. Affidavits.

However, these provisions are due to expire on or before 30 April 2022, after which the default position will be that these documents cannot be electronically signed.

Importantly, the following can no longer be electronically signed in Queensland:

  1. Wills;
  2. EPOAs; and
  3. Advanced Health Directives.

Managing the risks of electronic signing

Electronic signing is a convenient and essential tool for modern business. However, there are some risks to be mindful of.

  1. Be clear if you do not intend to be bound by an email or text: In Queensland, the Supreme Court has previously held that consent to electronic signing is likely to be inferred where negotiation has occurred by email. Because intention and consent are essential elements of an electronic signature, including a caveat in your negotiation emails that the contract is subject to formalisation, such as in a Deed, may help to avoid confusion later.
  2. Consider using a digital signature programme: A digital signature is a type of an electronic signature that is secured through public key encryption. Many people rely upon a scanned version of their normal signature or typed words as their signature on documents. However, these could be copied by anyone with access to them and it can be difficult to know with certainty who has signed the document. Relying on unsecure signatures means that another party could try and avoid their obligations later, as occurred in the NSW case Williams Group Australia Pty Ltd v Crocker [2016] NSWCA 265 where company directors were found not to be bound by a personal guarantee as the company manager used the directors’ signatures without their consent. At Rouse Lawyers, we use the digital signature service DocuSign to protect our clients’ signatures and give them peace of mind.
  3. If in doubt, ask for advice: The law around electronic signatures is still developing and subject to frequent change, particularly as COVID-19 means that the Queensland and Federal governments have been required to adapt quickly in introducing temporary changes to legislation from time to time. If you are signing an important agreement, it is best to be certain that you have complied with the relevant signature requirements.

If you need any further information or need advice on any of the above issues, please contact Rouse Lawyers on (07) 3667 9697 to speak to one of our Team.