From The Lawyers Desk: Electronic and Digital Signatures

by Shannon Ryan

Signatures are used for a number of different purposes, including:

  • corroborating identities;
  • confirming obligations; and
  • as a form of acknowledgement or acceptance.

In most instances, a signature is a handwritten name, mark or initial. However, more recently, signatures have taken on other forms, being displayed electronically or digitally.

What is an Electronic Signature?

An electronic signature often referred to as an “e-signature”, is data in an electronic form which enables individuals to sign digital materials. Today, most countries accept electronic signatures as a legally valid form of signing documents.

What is a Digital Signature?

Further to the above, digital signatures use a mathematical formula to encode and authenticate digital material including messages, documents and books (amongst other things). Given that digital signatures are strictly encoded, they are most commonly used in financial transactions where they allow for higher levels of fraud detection and security. Importantly, digital signatures are similar to handwritten signatures, seals or stamps, as they are a means of authorising documents online.

The difference between Electronic Signatures and Digital Signatures

The word e-signature is a broad term used to include many different types of electronic signatures, including specifically digital signatures. Digital signatures use a unique method of implementing e-signatures through the use of specific technology and mathematical formulae.

Both types of signatures allow for materials to be authenticated and signed. Relevantly, digital signatures differ in the sense that they comprise of a more technical encoding system, the benefit of which is improved security and fraud detection when compared to that of electronic signatures.

When is an Electronic Signature Valid in Australia?

Electronic (and digital) signatures are recognised in Australia as legally acceptable and as having the same effect as handwritten signatures, provided they comply with the Electronic Transactions Act (as adopted by each state and the Commonwealth) (ETA). Where a law specifically excludes the operation of the ETA, then an electronic signature cannot replace a traditional signature. Moreover, the validity of the electronic signature is conditional upon:

  • it identifies the person who is signing the document and indicating that person’s approval to the information communicated;
  • it being appropriately reliable in the circumstances for the purpose for which the information was communicated; and
  • the person to whom the signature is to be given consents unconditionally to its use.

Provided the above criteria is met, electronic and digital signatures will be deemed valid and capable of binding parties.

For more information on this topic contact Nicholson Ryan Lawyers on +61 3 9640 0400.

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