The electronic signing (e-signing) and exchange of contracts in the property space has largely taken over the old-fashioned paper exchange of contracts following a concerted effort across the industry over the past 5 years. This was led by the introduction of multiple technologies which assist practitioners in processing, sending, signing, and exchanging a contract entirely electronically and the benefits of the awe inspiring cloud based computing and smart phones we (and more so our clients) have become accustomed to.
E-signing has now become commonplace across the industry allowing for practitioners to deal with issues faster and easier. This has given practitioners greater marketing reach than they otherwise may have experienced. They can now communicate almost entirely using technology with their client base, rather than having a fixed office where clients are required to meet them in person at some point during the transaction. With the prevalence of multiple platforms, programmes and marketing people touting their own digital signing platforms it is no wonder though there is so much confusion within the professional sector about what systems are or are not valid to ensure a properly binding contract.
This confusion can lead to significant problems for practitioners when disputes arise and as we continue to experience troubled financial times, with a particular focus on the property sector, the importance around the validity of contracts will no doubt become of greater concern to all parties in the times ahead. Many practitioners that deal in the dispute resolution space have already seen a significant jump in cases and expect to see many considered cases around the multiple issues of e-signing and contracts in the times ahead.
The world of e-signing; however, is not and does not need to be complex as many might have you believe. In fact, the laws allowing for these platforms have been in place since 1999. To put this in context Google was founded in 1998 and eBay in 1995. The Electronic Transactions Act 1999 (Cth) (ETA) was introduced, and States quickly followed by introducing essentially identical legislation n between 1999 and 2001. It was said to herald in a new age of complete electronic signing, contract, and data exchange between businesses with the hope of eliminating paper entirely.
Many think that the benefits have only recently started to show themselves without realising we have all likely conducted multiple business transactions on behalf of clients which relied on the ETA or its state counterpart, without even realising it. For example, every time we exchanged a contract over email using scanned copies. Because of the prevalence of more advanced software platforms commonly used in today’s conveyancing practice that have done away with paper contracts entirely, most practitioners have started to turn their minds to the legislation requirements.
What laws give practitioners the basis for signing electronically?
There are a few key pieces of legislation both nationally and state based that support the full process of e-signing in the conveyancing world. At a national level we have the ETA. Under this are each of the State based Electronic Transactions Acts, all of which mirror what is in the ETA. Under these Acts, all manner of documents and communications can be considered valid and binding at law if communicated in electronic only means, subject of source to the relevant requirements under the Acts.
Thanks to recent amendments, the Corporations Act 2001 (Cth) includes specific provisions entitling companies to sign any agreements, deeds, notices, or other documents electronically. In New South Wales, the Conveyancing Act 1919 (NSW) was updated to reflect the new processes being adopted in e-signing of contracts. Importantly, it put beyond any doubt that deeds also can be signed electronically. Queensland and Victoria have also introduced their own supporting legislature with all other States still considering this requirement. There is also the common law position that supports the ability to sign documents, including deeds, electronically, see Bendigo and Adelaide Bank Ltd v Pickard [2019] SASC 123.
What are the basic requirements?
Care needs to be taken to ensure the process of e-signing is done in compliance with the requirements of the ETA or its State counterpart which, although simple, must be followed and which can be summarised as follows:
(a) You must be able to identify the person signing – always a good idea to get some form of ID for example and confirm email addresses etc. Multi-factor authentication is now readily available as an extra safety mechanism.
(b) The signer must clearly indicate their intention and willingness to sign and be bound by the contract – most platforms have good T&Cs that a signer must first approve of before proceeding.
(c) The method of signing must be as reliable as appropriate for the intended purpose – using a verified means of signing is always a good idea.
(d) Consent must have been given to sign the document electronically by the signer – this is usually covered as part of the T&Cs of the platform.
What special issues do practitioners need to keep in mind – deeds vs agreements?
One aspect which can be overlooked by many in the industry is the difference in signing requirements for an “agreement” versus “a deed”. The key difference being the formality required to signing a deed as opposed to a simple agreement, namely the process of witnessing. Special care needs be taken to ensure that the usual compliance requirements for a witness are satisfied when signing a deed. The same steps that would have previously been taken must still be adhered to by the witnesses including:
(i) A witness must actually “witness” the signing party sign the document. This can now be done using AVL in most States.
(ii) The requirement for the witness to sign the document after the signer, for obvious reasons.
(iii) The witness must not be a party to the deed.
(iv) The witness must include their relevant identification details in the case of a dispute, i.e. their name and address.
Queensland and Victoria have specific legislation for conveyancing that allows for contracts for sale to be signed without the need for a witness; however, in all other States these witnessing provisions still apply.
There is technology regularly used by many real estate agents and others in the industry which is not specifically designed to satisfy these requirements. Care needs to be taken by practitioners and the industry as a whole to ensure they are using proper platforms that comply with the formality of e-signing requirements in order to avoid embarrassing situations in disputes.
Fortunately, there are some very good services available which have in-built process and safety mechanisms to ensure proper compliance with all of the e-signing regime requirements, including that offered by InfoTrack through the SignIt platform, powered by DocuSign.
