ELECTRONIC SIGNATURES – A WORD OF CAUTION

Stuart O’Neill – Principal at Creevey Russell Lawyers.

Last week I was asked to provide a contract in Docusign so that a party could sign electronically whilst overseas. I was interested because I had not heard of that before and it occurred to me these facilities will or may soon change the way contracts in many settings are formed. There are numbers of e-signature facilities which can be used (Docusign is only one; Adobe is another), and they are being pushed especially in sales industries like real estate where reps want to speed up and ‘deformalize’ the signing process. These facilities are ‘apparently’ popular overseas, but the take-up in Queensland has been slow (for good reason I think).

You may see the use of electronic signatures (or requests to use them) more regularly as time goes by. Please note that whilst the electronic transactions legislation (under both Qld & Cth statutes) permits signatures to be done electronically, you need to be very careful with using them because:

  1. Agreement to e-sign The parties to the document must consent to e-signing (see s14 Electronic Transactions Act). This will usually require the document itself to contain a clause that says it can be e-signed.
  2. Witnessing the e-signature A person cannot witness e-signing by a another person and to my knowledge facilities like Docusign do not cover witnessing. Hence you cannot use them on any document that requires a witness, which will exclude:

    all Deeds (see s45 Property Law Act); 
    all documents that require a qualified witness (solicitor, JP or Comm Dec); 
    all Wills & EPAs (s10 Succession Act);
    and any contracts/documents that may need to be proven in court.

  3. Lodgement conditions with government registries You cannot file an e-signed document in most government, stock exchange or other registries under their current lodgement rules. These rules generally, at best, only permit physically signed documents to be scanned and uploaded, but that is all. See for example the Qld Land Titles Practice Manual, ASIC’s Electronic Lodgement Protocol, the ASX Rules and PEXA.
  4. Signing by mistake There is a difference between giving a written signature (which can be effected electronically) and giving written consent (which requires proof the signer agreed to the document). s12(4) of the Trust Accounts Act, for example, specifically says ‘written consent’ must be given for disbursements from a trust account.

It is easier for a person to mistakenly e-sign a document on a phone or tablet than it is to mistakenly physically sign a hard copy document, and that can count against you if the validity of a contract or other document which is intended to indicate consent is challenged on the manner of its execution.

Having a witness to a physically signed document can be very important in this regard. Lawyers are generally required to caution clients before they sign legally binding contracts and to resist pressures on clients to sign documents quickly and without due thought and consideration of all the legal issues. For this reason alone, in many cases lawyers will be naturally hesitant to recommend an e-signing arrangement for their clients.

Article written by Stuart O’Neill, Principal, Commercial & Property Team