Introduction to electronic signatures

An electronic signature, or eSignature, refers to data in electronic firm, 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 under which it was created.

Electronic signatures are a legal concept distinct from digital signatures, a cryptographic mechanism often used to implement electronic signatures. While an electronic signature can be as simple as a name entered in an electronic document, digital signatures are increasingly used in e-commerce and in regulatory filings to implement electronic signatures in a cryptographically protected way.

What is an electronic signature?

An electronic signature is intended to provide a secure and accurate identification method for the signatory to provide a seamless transaction. Definitions of electronic signatures vary depending on the applicable jurisdiction. A common denominator in most countries is the level of an advanced electronic signature requiring that:

• The signatory can be uniquely identified and linked to the signature
• The signatory must have sole control of the private key that was used to create the electronic signature
• The signature must be capable of identifying if its accompanying data has been tampered with after the message was signed
• In the event that the accompanying data has been changed, the signature must be invalidated

Electronic signatures may be created with increasing levels of security, with each having its own set of requirements and means of creation on various levels that prove the validity of the signature. To provide an even stronger probative value than the above described advanced electronic signature, some countries like the European Union or Switzerland introduced the qualified electronic signature. It is difficult to challenge the authorship of a statement signed with a qualified electronic signature - the statement is non-repudiable. Technically, a qualified electronic signature is implemented through an advanced electronic signature that utilises a digital certificate, which has been encrypted through a security signature-creating device and which has been authenticated by a qualified trust service provider.

Electronic signatures in Australia

The use of electronic signatures in Australia is governed by the Electronic Transactions Act 1999 (Cth) and corresponding legislation for each State and Territory (ETAs). The general position is that provided the requirements of the ETAs are satisfied, agreements can be executed electronically and there are low risks of the Courts holding those agreements invalid or unenforceable for the reason that they were executed in that way.

Generally, the ETAs provide that an electronic signature will have the same effect as a written signature provided that three requirements are met:

• Identity: The method of signing must identify the person signing and their consent to the content of the document. This will ordinarily be satisfied by the use of an electronic signature accompanied by typed text setting out the signatory’s name and position (if appropriate).
• Reliability: The method of signing must be as reliable as appropriate for the purpose of the document, in light of all the circumstances. This may be demonstrated, for example, by using software that requires user authentication (such as a password) before it will insert a digital signature, and/or through the use of digital certificates, which set out metadata regarding the time and place a signature was inserted.
• Consent: If the “receiving entity” (i.e., the entity to which the document will be provided) is a Commonwealth body, any technical requirements imposed by it regarding the signature must have been met. If the “receiving entity” is not a Commonwealth body, it must have consented to the method of signing. Where the document in question is an agreement, a clause in the agreement could provide that the parties agree that the document can be executed using electronic signatures and identify the relevant service which the parties agree to use for that purpose.

The ETAs do not displace the common law on electronic signatures but are intended to prove certainty and clarity. Therefore, even if these requirements are not satisfied, a court may find that an electronic signature is nevertheless effective at indicating the signatory’s consent to the signed document, particularly given that courts have recognised that electronic signatures are “a fact of modern commercial life”.

Source Davies Collision Cave