With the ever increasing use of technology the need to sign a document on paper is becoming more and more redundant. Under the Electronic Transactions Act 2002 (“the Act”) certain paper-based legal requirements may be met by using electronic technology, in which the Act recognises that there is a functional equivalence between paper form and technology to meet a legal requirement.
The formality of signing documents is recognised under the Act. An e-signature can be used to sign documents where the signature adequately identifies the signatory and indicates the signatory’s approval of the information to which the signature relates. The e-signature must be as is reliable as is appropriate given the purpose for which, and the circumstances in which, the signature is required.
Where information is legally required to be signed and given to a person, the use of an e-signature can only be used if that person consents to receiving the signature in electronic form.
The biggest doubt for a party is being able to rely on an e-signature to bind that the parties to a document or transaction. Under the Act, an e-signature is presumed as reliable as is appropriate if:
The means of creating the e-signature is linked to the signatory and to no other person; and
The means of creating the e-signature was under the control of the signatory and of no other person; and
Any alternation to the e-signature made after the time of signing is detectable; and
Where the purpose of the legal requirement for a signature is to provide assurance as to the integrity of the information to which it relates, any alteration made to that information after the time of signing is detectable.
The Act is technologically neutral in that it does not require any particular technology to be used. However, when an e-signature is used (particularly when the signature is a legal requirement) it is important to have regard to the reliability or sophistication of the technology for the e-signature to be reliable. The importance of the technology used increases or decreases depending on the context of the transaction. Where a signature requires a high level of reliability, the reliability of ink may be the best option for all parties concerned.
Under the Act, there are a number of exceptions in which an e-signature will have no legal effect on documents and transactions including, but not limited to:
Power of attorney or enduring powers of attorney;
Affidavits, and other documents given under oath or affirmation;
Negotiable instruments, such as cheques.
For further information about the Electronic Transaction Act 2002 contact James Moran.