Reasons a business enter into contract typically include commercial gain. If a signed contract is returned incomplete or late – or worse, a signature has been forged – it could end up costing some or all of the parties involved.
According to Brad Newton, vice president of DocuSign ANZ, businesses can avoid these types of scenarios by ditching written signatures and going digital.
Legally enforceable and court-admissible
Newton told Dynamic Business that electronic signatures are both legally enforceable and court-admissible under the Electronic Transactions Act 1999 (Cth), provided key requirements are met.
“Principally, information on when an electronic document is sent, received and signed must be recorded and readily available,” he said.
“In terms of which documents can and can’t be signed electronically, only a few exclusions apply under the Act. Wills, for example, still require a wet signature in every state. For a majority of standard business documents, including contracts, electronic signatures are legally enforceable.”
Superior security measures provide certainty
Newton said electronic signatures are more secure than written signatures due to the availability of safeguards designed to provide an audit trail, and thus certainty around the integrity and authenticity of a signed document and the signatory’s identity. In addition to authenticating a signatory using their email address, safeguards include:
- visibility of a signatory’s IP address;
- a record of when and where documents are received and signed; and
- mechanisms designed to prevent, expose and record (for legal purposes) attempts to tamper with documents.
According to Newton, additional levels of security are possible, depending on a business’s internal policies and the sensitivity of the documents they want signed. He said these include the ability to:
- ask a signatory to enter a piece of information only he/she would know;
- employ facial recognition and store voiceprints for speech verification;
- embed a person’s passport and driver’s license into a document; and
- prevent a signatory from signing off on a document until he/she has entered a one-time SMS code.
“All sorts of technologies are coming to market, which are designed to ensure a signatory’s identity beyond any doubt,” Newton said.
“Conversely, when you’re dealing with a paper-based process, it can be difficult to validate who the signatory is. For example, if you send a document to someone’s house for signing, such as a home loan contract, and it returns in the post two weeks later, signed, you’ve got no way of knowing if it was in fact signed by the correct person. Ultimately, you want to know a signatory is who they say they are.”
Cost-effective, quick and accurate
In addition to being secure and having legal weight, Newton said electronic signatures are:
- Cost-effective: “We’ve found that businesses that digitise save, on average, $48 in hard costs per document. Likewise, the Coalition’s Policy for Better and More Accessible Digital Services indicates that completing a transaction digitally is 42 times cheaper than completing it face to face. If you’re a business sending out thousands of contracts and documents for signing, the potential savings become clear.”
- Speed: “Historically, documents such as a home loan would take weeks to get signed. With an electronic process, they can get signed in less than a day and, in some case, in less than 15 minutes.”
- Accuracy: “In a paper-based process, time is wasted when a document is filled in incorrectly and need to be recompleted. With an electronic process, business can all the boxes are ticked before it can be signed.”
See also: Electronic contracts