A digital signature, or e-signature, refers to data in electronic form, which is logically associated with other data in electronic form and which is used by the signatory to sign. This type of signature provides the same legal standing as a handwritten signature as long as it adheres to the requirements of the specific regulation it was created under.
Increasingly, digital signatures are used in e-commerce and in regulatory filings to implement electronic signature in a cryptographically protected way. The concept itself is not new, with common law jurisdictions having recognized telegraph signatures as far back as the mid-19th century and faxed signatures since the 1980s.
Signing contracts electronically is an easy and convenient process for buyers and sellers.
Australia passed the Electronic Transactions Act in 2000. In brief, within Australia both on a federal and state level, usage of electronic and digital signatures are acknowledged and the a general rule has been established that no transaction will be invalid simply because it was completed electronically.
In Australia the Electronic Transactions Act 1999 (which incorporates amendments from Electronic Transactions Amendment Act 2011), Section 10 - Signatures, specifically relates to electronic signatures.
Electronic signatures are now commonly used for
• Leases
• Sales contracts
• Housing agreements
• Non disclosure agreements
• Releases
• Invoices
A “digital signature” is a term used by some to describe a type of electronic signature. Digital signatures utilise technology that associates the signature with hidden data which can be used in an electronic communication. The main difference between an “electronic” and a “digital” signature is that:
• a digital signature is linked to certain information and can be verified; whereas
• an electronic signature may just be text on an email.
Digital signatures are therefore unique electronic “identities” which make them a more trusted and secure way of verifying the author of a document.
How does this work? Using a digital signature tool which incorporates technically accepted identity verification and authentication methods (such as public key cryptography) facilitates the sharing of documents electronically between parties and provides for these parties to digitally sign documents on their mobile phones, tablets, laptops or desktop devices.
Some points to consider:
• The technology of digital signing cannot always solve all document signing requirements. Some legal documents have additional requirements – ie being notarised and/or witnessed. Some documents may also require that the signatures be handwritten in order to make the agreement binding. In these cases the hard-copy, physical signature route needs to be taken.
• Different states and jurisdictions may impose different laws or apply the laws differently as far as the use of digital signatures is concerned, and in addition, in some instances the law may exclude particular types of electronic transactions. Your real estate or buyers agent should be able to guide you in this regard.
• Before contract signing, the parties to the contract need to agree that using electronic signatures for the agreement is acceptable.
