Developments in Electronic Execution and Witnessing of Commercial Documents Robert Cole Senior Lawyer T 03 9242 1392 robert.cole@ags.gov.au July 2020 Topics — Signing — The Electronic Transactions Act — Agreements — Deeds — Witnessing — Companies 2 Signing — Traditional pen and ink signature not required at common law — Signature / act of signing should evidence: – identity – intention to be legally bound — Also assists to: – authenticate document – mitigates risk of a signatory denying they are bound 3 1
Signing Type of Description Examples Signature Physical or Marking a physical document to indicate Handwritten signature in ink on ‘wet ink’ assent to its terms physical document A person’s mark on a physical document Electronic Leaves no physical impression on the Typing a name in electronic format document Scanned signature inserted (pasted) Any electronic communication which into electronic document satisfies the characteristics of a Signing a soft copy document with a signature stylus A name in the ‘From’ field in an email Clicking an ‘I accept’ button Digital A type of electronic signature To use digital signatures, a incorporating a verification element (eg specialised platform or software is cryptographic authentication required technology) to ensure high standards of Platform or software should be based assurance of signatory identity, on cryptographic authentication document confidentiality and integrity technology and non-repudiation 4 The Electronic Transactions Act — Electronic Transaction Act 1999 (Cth) ( ETA ) and State and Territory legislation — Certain documents may be validly created and signed electronically (eg correspondence; contracts; work orders) — If signature required, electronic signature is valid if 3 requirements are met (ie identification, reliability, consent) — Common law not displaced — There are exclusions 5 The Electronic Transactions Act Requirement Meaning Identification the recipient must be able to identify from the method of execution the person signing and confirm that the person signing intends to be bound by the information communicated (typically an electronic signature accompanied by the signatory’s name and position) Reliability the method used to sign must be reliable, which is objectively determined by considering all relevant circumstances and the purpose for which the signature is required (it may be sufficiently reliable that a password protected email account is used to send the communication, or that software is used which requires a password or authentication before a digital signature is inserted). Consent the counterparty to the document being electronically signed must agree to the document being signed electronically. If the Commonwealth is the receiving entity, it may impose technical requirements in connection with the signature. 6 2
Agreements — No particular formality — Signing requirement facilitated by electronic transactions legislation — An option if formalities of a Deed are problematic — Also, a purported deed which fails on the formalities may be enforceable as a contract 7 Deeds — The execution of a deed consists of 3 acts (signing, sealing, delivery) — Common law ‘paper rule’ — Legislation can displace the common law paper requirement — Benefits of deed vs contract — May be in electronic form and signed electronically in New South Wales (since November 2018), Victoria and Queensland 8 Documents requiring witnessing — Not a formal common law requirement. Derives from statute — Deeds - witnessing required in all jurisdictions except Victoria and Queensland — Traditionally, witness must be present and see the physical act of execution before attesting to that fact by signing the same document — Emergency laws facilitate electronic and remote witnessing in New South Wales, Victoria, Queensland, Australian Capital Territory and Tasmania 9 3
Execution by companies — Companies may sign in various ways — Statutory assumptions (ss 127 & 129(5)) — The ETA does not apply to execution under s127 of the Corporations Act — Uncertainty as to whether electronic execution is compliant with the requirements of s 127 — Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Cth) 10 4
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