We described the ‘electronic signatures’ in our blog on 20 August 2015: documents that are signed electronically rather than in hard-copy form. ‘Digital signatures’ are another emerging form of signature which may be used to ‘sign’ documents electronically, rather than physically.
Digital signatures are secured using cryptic mathematical functions specific to the individual using the certificate. Certificates are issued by a certificate authority, and can be purchased or obtained for free (see http://www.entrust.com for an example).
The use of digital certificates and e-signatures is an emerging area of innovation in Australia. As such, there is no legislation which directly deals with these forms of signatures at this time.
Under the Electronic Transactions Act (1999), ‘a transaction is not invalid because it took place wholly or partly by the means of one or more electronic communications’. So similar to electronic signatures it follows that forming a contract electronically using digital certificates will evidence a legally binding contract.
The requirements for an electronic communication to operate as a signature under the Act are:
- The communication must provide a method used to identify the person and indicate their intention in respect of the information communicated;
- The method must be as reliable as appropriate for the purposes;
- The method must comply with any specifications of the Commonwealth entity it is given to and that the other party has consented to the use of this method.
Therefore, as long as the digital certificate is linked to an individual who can be reliably identified, and the recipient of the signature consents to it being given electronically, documents may be signed entirely using electronic communications methods.
Digital signatures have a higher level of integrity, and ensure more authenticity than a more generalised e-signature or even handwriting. In time, we expect digital signatures to become a requirement in the same way that PIN’s are now used in place of signatures for credit card transactions.