Electronic Signatures: How effective are they?

In the age of technology and the Internet, more and more communications are taking place electronically. Many business men and women are putting away their pens and paper and instead opting for the faster, instant world of technology, using their laptops, smart phones, tablets or other electronic devices to communicate and conduct everyday transactions. Writing one's name on the customary "dotted line" has traditionally been recognised as a way of affirming that the signatory is bound by the document, is attesting to its truth and correctness or simply confirming their identity. Whilst the traditional signature is by no means dead or obsolete, a significant increase in the volume of communications being conducted electronically, whether that is wholly or in part, has created the need for an electronic alternative. For over a decade now, Australian legislation has supported the use of electronic communications. Legislation is in place at both Federal and State levels to qualify that 'transactions effected electronically are not by that reason alone invalid.' The Electronic Transactions (Victoria) Act 2000 ('ETVA'), following on from its Federal counterpart, The Electronic Transactions Act 1999 (Cth)('ETA'), was enacted to deal with the rise in electronic forms of communication, particularly in terms of the effect this has on transactions that have legal consequence and implications. The ETVA not only establishes the validity of electronic communications but also provides for the use of electronic signatures as well as electronic production and retention of documents and information. But do electronic communications really measure up? Do electronic agreements have the have the same weight as a one that was forged with paper and ink, signed by hand? What is an electronic signature? The term "electronic signature" may refer to many different things, each with their own level of security. Digital signatures use complex encryption technology that is difficult to forge. At the other end of the spectrum, the "electronic signature" may refer to a scanned copy of a hand written signature that is pasted on to an electronic document. The level of security that is required in order for the electronic signature to be satisfactory may vary depending on a variety of factors, including the type, weight and importance of the transaction. The ETVA states that: "If, by or under a law of this jurisdiction, the signature of a person is required, that requirement is taken to have been met in relation to an electronic communication if- (a) A method is used to identify the person and indicate the person's approval of the information communicated; and (b) Having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated; and (c) The person to whom the signature is required to be given consents to that requirement being met by way of the use of the method mentioned in paragraph (a)"[2] When determining whether a not a signature will be considered reliable and appropriate for the purposes, the Court in Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168 looked at 'whether the parties' conduct, viewed objectively, reveals tacit understanding or agreement or a manifestation of mutual assent, which evinces an intention to create legal relations.' This was followed in Austral-Asia Freight Pty Ltd v Turner [2013] FCCA 298, where the Court held that in the absence of any formal written contractual documents, correspondence between the parties that included oral agreements and emails was sufficient in both writing and signature to create a binding agreement involving the payment of debt. The Court noted that although the Instruments Act 1958 (Vic) applies to such an agreement the conditions set out in s126 can be met in accordance with the ETVA.[3] In Brown Bros Cabinetworks Pty Ltd v Graham (Civil Claims) [2010] VCAT 70 (20 January 2012), the Tribunal considered whether an email from the purchaser to the supplier indicating that they wished to terminate the contract, satisfied the written notice requirements under s34(2) of the Domestic Building Contracts Act 1995 (Vic). The Tribunal found that it did constitute notice in writing, and that in the absence of any evidence to suggest that the supplier objected to receiving notice by email, they had consented.[4] The Tribunal further stated that as per Legal Services Board v Forster [2010] VSC 102 and Faulks v Cameron [2004] NTSC 61 a "typed in" signature may suffice. In GetUp Ltd v Electoral Commissioner [2010] 268 ALR 797, the Court found that an electoral enrolment application in which the applicant had signed using a digital pen to make a facsimile signature, met the criteria for reliability under the ETA noting that the method both identified the signatory and their intentions should therefore be considered reliable. Furthermore, as the Commissioner had previously accepted signed applications that were subsequently faxed in, the method was appropriate in the circumstances. Although disputes still exist and some uncertainty still remains in relation to electronic signatures, as more and more communications move to electronic forms, it is becoming increasingly difficult to argue that electronic transactions and signatures do not constitute binding agreements or meet signature requirements. Since the institution of the ETA and the complementary Acts at State level, the Act has been amended to further solidify the place of electronic transactions and remove many of the legal obstacles associated with the use of electronic communication, demonstrating the growth in acceptance of electronic signatures.

Electronic Transactions (Victoria) Act 2000 (Vic), s1(a).

[2] Electronic Transactions (Victoria) Act 2000 (Vic), s9.

[3] Instruments Act 1958 (Vic) s126(2).

[4] Legal Services Board v Forster [2010] VSC 102