Please sign electronically 2.0

A range of electronic signing tools are now available, but can contracts and deeds be signed electronically?

Since the original version of our ‘Please sign electronically’ article there have been changes to the law to facilitate electronic signatures. This version is an update of that article to reflect the latest changes.

Types of electronic signature

‘Electronic signatures’ can include a scanned image of a signature inserted into a document, a typed name or a digital signature created using public key infrastructure, or a combination of these.

There are several cloud-based electronic signing services available. Some use typed signatures. For example, the service may allow you to upload a document to an electronic signing website, then email a person a website link to the document for them to sign. When they click the link they are taken to a website page with the document. It contains a line and an ‘x’ for them to sign, but on the line is a box that states ‘click to sign’. The person can type their name and choose a variety of fonts with appearances similar to handwriting. They can then click ‘apply’ and their name appears in that font on the signature line. If the person needs to sign in other places they can click in the other places in the document to insert the same signature.

Public key infrastructure is a more secure form of signing. When you sign a document using a digital signature, you cryptographically sign the document with your private encryption key, which you keep secret. For some systems, you might insert a USB key containing your private key and enter a PIN to run the encryption.

The recipient decrypts the signature with a corresponding public key and checks with the key certification authority that the key has not been revoked. If you lose your key, you tell the key certification authority so it can revoke the key and can tell people that the key has been revoked.

Legal requirements for signatures

There is no requirement under the common law for a contract to be in writing and signed. You can make most contracts through a spoken agreement. However, it’s prudent to ensure that contracts are in writing to confirm what has been agreed and that they are signed to confirm that parties are bound.

Legislation requires certain contracts to be in writing and signed. The most well-known is the Statute of Frauds legislation that requires writing for guarantees and dispositions of land signed by the guarantor or seller, in sections 56 and 59 of the Property Law Act 1974.

What satisfies a statutory requirement for writing and a signature is a matter of statutory interpretation.

‘Writing’ is defined in schedule 1 of the Acts Interpretation Act 1954 to include any mode of representing or reproducing words in a visible form. An email or a document in some other electronic format, such as a pdf, can satisfy the requirements for writing in a Queensland Act, subject to any contrary intention appearing in the Act.¹

'Sign' has been held to mean 'affixing in some way, whether by writing with pen or pencil or by otherwise impressing upon a document, one’s name or ‘signature’ so as personally to authenticate the document'.² Affixing a rubber stamp can be sufficient. A name typed in an email can also be sufficient.³

Doubt about whether an electronic signature is effective can also be removed by electronic transactions legislation. Section 14(1) of the Electronic Transactions (Queensland) Act 2001 provides:

14  Requirement for signature

(1) If, under a State law, a person’s signature is required, the requirement is taken to have been met for an electronic communication if—

• (a) a method is used to identify the person and to indicate the person’s intention in relation to the information communicated; and
• (b) the method used was either—
  • (i) as reliable as appropriate for the purposes for which the electronic communication was generated or communicated, having regard to all the  circumstances, including any relevant agreement; or
  • (ii) proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence; and
• (c) the person to whom the signature is required to be given consents to the requirement being met by using the method mentioned in paragraph (a).

In Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119,⁴ an email was held to meet the requirement for writing signed by a seller in s 59 of the Property Law Act. Martin J indicated that the requirement in s 14(1)(b) was met because the person signing could be identified and their intention could be established by evidence made up of various conversations before the email was sent together with an admission in the pleadings about who sent the email.

As is the case for any signature, it is possible that an electronic signature may be forged and ineffective. For example, in Williams Group Australia Pty Ltd v Crocker [2016] NSWCA 265, an image of a signature of a director was electronically placed on a guarantee by someone other than the director, without the director’s authority. Someone in the company’s Murwillumbah office accessed the signing system and placed the director’s signature on the document at a time when the director was not in Murwillumbah. The signature was ineffective and the director was not bound by the guarantee.

Witnessing of contracts

There is no requirement under the common law for contracts to be witnessed. It is not unusual for the parties to a contract to provide for signatures to be witnessed however because it might help resist any potential claims by a party signing that it was fraudulently signed by someone else. There are practical issues to overcome if electronic witnessing is to be as effective for this purpose as manual witnessing.

Signing by companies

Under s 127(1) of the Corporations Act 2001 (Cth), a company may execute a document, including a deed, by having two directors or a director and secretary of the company sign the document.⁵ Under s 129(5) of the Corporations Act, a person can assume that a document has been duly executed if it appears to be executed in accordance with s 127(1).

A company can execute a document through an agent. Section 126 of the Corporations Act provides that a company’s power to make a contract or execute a document, including a deed, may be exercised by an individual acting with the company’s express or implied authority.

Under s 110A of the Corporations Act, a person may sign a document under ss 126 or 127 electronically using a method of signing that:

• identifies the person signing and indicates their intention in respect of the information recorded in the document; and
• is as reliable as appropriate for the purpose for which the information was recorded, or proven in fact to have fulfilled the function of identifying the person and indicating their intention.

Section 110A(4) of the Corporations Act makes it clear that all persons signing do not have to sign in the same way, for example, one director of a company may sign a paper copy while another director of the company electronically signs an electronic copy.

Deeds

At common law, a deed was required to be written on paper, parchment or vellum and had to be sealed by the parties executing the document and had to be delivered.⁷

For companies, these requirements have been removed by s 110A, 126 and 127 of the Corporations Act.

For individuals, corporations, partnerships, unincorporated associations and the State, these requirements have been removed by ss 46E, 46F, 46G and 46GA of the Property Law Act 1974. A deed may be in the form of an electronic document and may be electronically signed, under s 46D of the Property Law Act.

Signatures on deeds no longer need to be witnessed, under ss 46E(2), 46G(2) and 46GA(2).

Under the definitions of ‘electronically sign’ and ‘accepted method’ in s 44 of the Property Law Act,an electronic signature is a method that:

• identifies the signatory for the document and the signatory’s intention in relation to the contents of the document;
• is either:
  • as reliable as appropriate for the purposes for which the document is made or signed, having regard to all the circumstances, including any relevant agreement; or
  • proven in fact to have fulfilled the function of identifying the signatory and their intention by itself or together with further evidence; and
• is consented to by each other signatory to the document.

Can a contract or deed be signed electronically? For contracts the answer is often 'yes'. For deeds the answer is now also usually ‘yes’.

^{The information in this publication is provided for general purposes only. It is not to be relied on as a substitute for legal advice. Crown Law and the Department of Justice and Attorney-General accept no liability for losses caused by reliance on the material in this publication. Formal legal advice should be obtained for particular matters.}

_{[1] Section 4 of the Acts Interpretation Act 1954.
[2] Goodman v J Eban Ltd [1954] 1 QB 550 at 557 in relation to the requirement for a letter to be signed under s 65(2) of the Solicitors Act 1932 (UK) (repealed).
[3] Stuart v Hishon [2013] NSWSC 766 in relation to confirmation of a debt required to be signed under s 54(4) of the Limitation Act 1969 (NSW).
[4] See Melinda Pugh’s legal update for more information about this case: http://www.crownlaw.qld.gov.au/resources/publications/a-good-reason-to-think-before-you-hit-send.
[5] Or the sole director and secretary can sign for a proprietary company with a sole director who is also the sole company secretary.
[6] Section 7A(2) of the Electronic Transactions Act 1999 (Cth) and s. 4 and item 30 of schedule 1 of the Electronic Transactions Regulation 2000 (Cth). While item 30 refers to the 'Corporations Law', that is taken to include the Corporations Act 2001 (Cth) under s. 10(b) of the Acts Interpretation Act 1901 (Cth).
[7] Seddon N, Seddon on Deeds, The Federation Press, 2015 at paragraph [2.2]. Goddard’s Case (1584) 2 Co Rep 4b, 5a; 76 ER 396.}