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Are electronic signatures legally binding in Australia for contract execution?

In an era defined by digital transformation, the conventional ink and paper methods of signing contracts are being left behind. Electronic signatures (eSignatures) are rapidly emerging as an alternative. But are eSignatures legally binding for contracts?

While electronic signatures are prevalent across Australia, many still question whether contracts or agreements executed with them hold the same legal force as those executed through physical signatures.

The short answer: Yes. Electronic signatures are legally recognised in many jurisdictions worldwide, including Australia.

In Australia, electronic signatures are legally valid. They are governed by the Electronic Transactions Act 1999 (ETA) and its accompanying regulations, the Electronic Transactions Regulations 2020 (ETR), at both the federal level and in each State and Territory.

The longer answer: Not just any electronic signature will do the job.

The ETA outlines various legal requirements, including the method, participant consent and document retention.

For example, electronic signatures must be able to verify the users and trace any changes within the document to be valid. Modern systems deliver this and more with advanced encryption, decryption and a change audit trail that cannot be forged.

SECURITY RISKS:

ORGANISATIONAL DIFFICULTIES:

  • Unnecessary expense: Many “common” eSign providers are comparatively expensive and don’t offer full ID verification.
  • Paper processes: Relying on paper processes can be very inefficient for an organisation and increase costs with things like printing, scanning, mailing, and document retention costs. Plus, with no backup for documents, if something happens to the original the organisation can face severe legal consequences.
  • Poor user experience: Not integrating systems could mean users need to leave your platform, which is not UX friendly.
  • Inefficient processes: Not having the right digital ID workflow could mean your employees have to handle multiple systems just to get one process completed end-to-end, which is inefficient and costly.
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