Electronic Signature

3 things to consider when using electronic signature

Is using electronic signature the new norm for signing documents?

You’ve spent weeks, maybe months, negotiating an agreement. But how do you sign it when everyone is working remotely, and social distancing is the new norm?  

There are several ways to execute an agreement. The ‘gold standard’ is signing a document in line with section 127 of the Corporations Act 2001,  

which includes any of the following methods in signing the document:  

  • any 2 directors;  
  • a director and a company secretary; or  
  • a sole director who is also the sole company secretary.  

There are other ways, of course, but when a document is signed this way, each party has the right to assume that the document has been duly executed and is therefore binding on and enforceable against the other company.  This applies even in the event of fraud or forgery by the company’s officers (unless, of course, one party knew or suspected something was off at the time).

Using Electronic Signature For Contracts

For the most part, an electronically-signed contract will be valid if your contract is properly drafted and someone with the right level of authority from the other party has signed or accepted your contract.  Software programs such as DocusignPandaDoc and Adobe can help facilitate the process.

electronic signature

We appreciate that in these unusual times, business needs to continue and contracts need to be signed so here’s some things to think about:  

  1. If you’re proposing to sign or accept a contract containing an electronic signature, first check with your lawyer to ensure it can be executed this way.  Affix your signature using a recognised program, and insist the other party does the same.
  2. Also consider asking the other party to send you an email to confirm that they have authority to sign the document with electronic signature.  They may ask the same of you.   We suggest a covering email (attaching the executed contract) along the following lines:
    “I / We have electronically signed the attached agreement / deed with the intention of entering into a binding contract with you, and I / We represent and warrant that I / We have actual authority to bind the party named in the attached agreement / deed.”
  3. You may prefer a handwritten signature in the following instances:  
    • If the document is a Deed, such that a witness is required, and it should be in physical form; 
    • If you’re taking part in large transactions with significant risk; or 
    • If you want to rely on the assumptions relating to proper execution in sections 127 of the Corporations Act 2010 (Cth), which appear to require a written signature. 

In these circumstances, execute the document with the electronic signature and then scan and send a copy to the other party.  The original agreement can be posted when it is permissible to do so.  

Questions? Give us a call.

4 thoughts on “3 things to consider when using electronic signature”

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