Understanding Electronic Signature Laws in Australia
Australia was an early adopter of electronic signatures partly due to the vast distances across the country. The Electronic Transactions Act (ETA) passed in 1999, legalizing e-signatures for simple transactions such as consumer agreements by companies. There was a long list of restricted transactions that still required a wet-signed document. But COVID-19 prompted the government to act quickly to maintain commercial operations, and amendments were passed to open a floodgate of digital contracting that was primed for use.
When the pandemic struck in 2020, the main driver for addressing digital documentation and e-signatures in Australia came from corporations that had been an e-signature exemption due to The Commonwealth Corporations Act 2001 that required wet signatures for many corporate operations. Australia severely restricted movement of the public to stop the spread of the disease, and the law of wet-signing documents forced a catch-22 for corporations to break the law of quarantine to lawfully execute a signature.
Australia amends law during COVID
A newer, temporary version of the ETA law passed in March 2020. With that law, corporate legal documents could be witnessed remotely and filed electronically, and signers were not required to sign the same physical document. Video witnessing abilities were also incorporated for certain transactions. Additionally, the number of e-signature exemptions was reduced from 147 to 93, enabling many government transactions such as for passports and child support. The Australian government is otherwise making an effort to provide many government services available online and to reduce the number of exemptions still further.
In March 2021 the temporary ETA law expired. Business groups encouraged the government to reinstate the law and make it permanent, but the measure stalled in Congress. Signing contracts lawfully was suddenly a regressive, inefficient, and even wasteful process. For five months while under an expired ETA law, the validity of many digital agreements could have fallen into gray areas of legality due to variances in local territory laws. Then in August 2021, another temporary measure passed reinstating the 2021 ETA status quo of electronic signatures, but it still kicked the can down the road by not making the law permanent. The government acknowledged:
Commonwealth and state laws have not kept pace with the way Australians engage with digital communications and technologies.
Catching up to digital demand
The pandemic-era electronic shift to Zoom conferencing and working in the cloud was sudden. The network capacity and functionality even five years earlier would probably have been a much more buggy, inefficient, and error prone experience, such as Windows 95. Instead, the fast adaptation was mostly smooth, and nearly 40% of Australian employed workers were able to work from home by April 2022. Internet use soared on once quiet residential networks as business parks lay dormant. And adoption of all things digital-solution took off.
Worldwide, the growth of the e-signature market had grown to $3B in 2021, and is projected to reach $35B by 2029. After such a fast buildup, the market is now in a phase of stabilization and catching up to current demand. The market is expected to triple in the next three years.
While e-signature laws are catching up to technological ability though, another hurdle in wide adoption of digital contracting is the number of individuals still unaware of e-signature’s capabilities and applications in their daily lives – what’s current and what’s possible. Due to complexity and variation in federal and regional laws, it’s just over many people’s heads or not on their radar, and digital activity is performed mostly by business. Most consumers don’t initiate digital agreements, but are instead introduced to e-signatures and digital documentation by a company in order to complete a transaction, like when buying a house.
In February 2022 the Australian Senate passed the Corporations Amendments (Meetings and Documents) Bill 2021, a permanent law that allows corporations to hold hybrid (in person and remote) meetings, and to use technology to execute, sign and share corporate documents.
Included in this act is the matter of deeds, a high-volume transaction which had required a witness signature. For companies, signing a deed in Australia is considered similar to signing an agreement, but this doesn’t apply to individuals nationwide: some states and territories still require a witness. It can be argued that since only eight percent of individuals had signed a deed (in the Accenture study above), the government is prioritizing on the most pressing concerns of business to operate more efficiently.
Work continues, though. Near the end of the 2022, the Treasury Laws Amendment (Modernizing Business Communications) Bill 2022 was introduced that aimed to modernize a long list of mostly corporate e-signature laws, but also includes more digital availability for Consumer Credit Protection and addresses requirements that specify notices must be published in newspapers, instead of other digitally public or otherwise prominent and accessible venues.
Note: Ironclad does not provide legal advice. This article provides educational guidelines that can help inform software and technology decisions.