With their sound legal standing and almost universal acceptance, electronic and digital signatures are rapidly changing the world of commerce.
By Beverley Head
If the internet has stripped friction from commerce, it is electronic and digital signatures that lubricate the digital economy. By 2017, analysts predict 700 million transactions will be authorised with electronic signatures. According to independent technology and market research company Forrester Research, demand has been growing by an average of 53 per cent annually since 2012.
Electronic or digital signatures have been accepted in Australia since 1999’s Electronic Transaction Act came into effect. Since the early- to mid-2000s, e-signatures have been equally legitimate in most major jurisdictions, including the US, Europe, Singapore and China.
An electronic signature can comprise anything from a click on an “accept” button on a trading site, to an exchange of emails agreeing to terms and conditions, to a facsimile of a physical signature that has been scanned or created on a touch screen.
A digital signature is a secured authority, backed by encryption and occasionally with biometrics, that does not rely on a facsimile of a conventional signature. Both versions are legally acceptable, but the latter is more secure.
Brisbane-based solicitor Peter Bolam says that for an electronic or digital signature to be considered valid, it must accurately reflect someone’s identity, be reliable and be provided with their consent.
A range of companies provides technology to underpin the use of digital signatures, although the market has consolidated in recent years. Big players include DocuSign (part owned by Telstra, which also uses and sells the system), Adobe Document Cloud eSign, Lexmark Kofax and Citrix RightSignature.
"For an electronic or digital signature to be considered valid, it must accurately reflect someone’s identity, be reliable and be provided with their consent."
DocuSign is the market leader and has more than 800 users in Australia, including Telstra, Optus, Commonwealth Bank, AMP, Australia Post and many law firms offering digital conveyancing. The digital transaction management system integrates with a range of software such as SAP, Microsoft Office 365, Google Docs, Oracle and Salesforce. Specific forms and documents can be created, with the recipient required to complete all sections before a signature is requested.
DocuSign’s secure global network manages the transmission of the documents and signature collection. Organisations can add extra security by requiring a one-time SMS code to authenticate the signature or a biometric such as a voice.
Dick Bussiere, principal technical architect for Tenable Network Security, says the use of encrypted digital signatures ensures the authenticity of the signature and also protects against maliciously injected code.
Brad Newton, DocuSign vice president, Australia and New Zealand, says that of the 100 million transactions underpinned by the software, there have been just “three or four” court cases questioning the validity of a transaction. DocuSign has won each of them.
As well as speeding commercial transactions, digital signatures drive digital transformation. Four years ago, just 12 per cent of customers at IP Australia – the Australian Government agency that administers intellectual property – transacted online. Today, it is 97 per cent. Previously, every patent and trademark application came with its own paper trail. Now, the process is entirely online and the system is available around the clock, every day of the year.
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Someone seeking a patent applies to use IP Australia’s system and is issued with a password and a digital certificate, with which they digitally “sign” the application by logging onto the system and typing in their name. The password and digital certificate authenticate the signature.
The Australian Taxation Office uses electronic signatures, while business activity statements lodged electronically use digital certificates. In some cases, a PIN is used, while registered tax agents using the electronic lodgment service combine their registration number and a unique code to sign.
While now widely accepted, online signing can throw up challenges. In December 2015, one of the first legal cases challenging an electronic signature in Australia was decided in the New South Wales Supreme Court. Williams Group Australia Pty Ltd v Crocker determined an electronic signature that had been placed on an online form was authentic, but that the individual had not given express consent for that signature to be used on that day, on that document.
The court dismissed the case and ordered the plaintiff to pay the costs of the third defendant, whose signature had been used without his permission. The judgment noted the defendant’s comment: “It’s difficult when you’re presented with a document that has your signature that’s electronic to know whether you did or you didn’t.” The audit trail, however, should prevail.
Electronic or digitised signatures:
A scanned and saved ink signature or a signature generated on a touchscreen with a stylus or fingertip. May also refer to “sign here” buttons on online commerce sites, which confirm an acceptance of conditions. While enforceable and valid in Australia, electronic or digitised signatures can be difficult to prove in court.
A secured and authenticated communication – generally using key encryption and occasionally backed by biometric identification – not necessarily involving any facsimile of a conventional ink signature. It is considered a more secure form of signature.
In Australia, a conventional signature is still required for passport applications, power of attorney, some insurance forms and some property transactions. In Singapore, wills and promissory notes are among a range of documents that require traditional signatures, while in China, the transfer of real property and some marriage, adoption and inheritance papers demand pen and ink signatures.
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