Many businesses have ditched the old pen and paper and moved most of their documents online.
In an age where people are going paperless, it’s time for you to consider the ways you can use online solutions to create and share your company documents.
One simple way to start going paperless is to use e-signatures.
What’s The Headache?
There’s no doubt that you’ll need to sign a lot of documents when starting your own business.
Imagine what it would be like if you didn’t have stacks of paper lying around, containing important information about your business.
Instead, imagine if it was all online and conveniently stored and catalogued on your computer.
You’d no longer have to deal with snail mail, missing files, or damaged documents.
Think about how much easier your business processes would be!
The easiest place to start is with e-signatures on your everyday business contracts.
Now, here’s what you need to know before introducing them to your business.
What Are E-signatures?
Electronic signatures, aka e-signatures, are an electronic mark which can be used to sign an online document.
There are three main ways to use an e-signature.
- Scanning your handwritten signature and pasting it onto the document
- Using a touch screen and stylus to sign the online document
- Software such as DocuSign which provides options on how you can sign the document
Simply put, an e-signature will allow you to efficiently authenticate a document without the use of a paper and pen.
Is An E-signature Legally Binding?
Most people new to e-signatures worry about whether they are legally binding. Well, are they?
The short answer is, yes.
The Electronic Transactions Act outlines the three things which you must comply with for a valid e-signature.
- Identification: The e-signature identifies the person signing the document and indicates an intention of the person signing, to be bound by the document.
- Reliability: The method used to sign is reliable. This means that the e-signature is suitable to be used for the agreement being signed.
- Consent: The person requiring the document to be signed must consent to an e-signature being used instead of any other form of signing.
In other words, when determining whether you have a valid e-signature, you should ask yourself these 3 questions:
- Does the e-signature properly identify the person and their intention to sign?
- Is the method reliable?
- Does the person signing it consent to an e-signature being used?
It sounds pretty simple, right?
Well, there are some situations which are not appropriate for e-signatures.
It’s important for you to know when an e-signature won’t be appropriate because you will run into serious legal problems if your documents are not validly signed!
When Is An E-signature Not Appropriate?
Depending on the type of document, there are some which don’t allow you to use an e-signature.
There are five types of documents that can’t be signed using an e-signature:
- Documents that need to be witnessed (e.g. a deed where the signatory is an individual)
- Documents to be personally served
- Certain court documents
- Powers of Attorney
Also, there are some documents where the law is not clear on whether an e-signature can be used.
In these situations, if everyone who’ll be a party agrees, then it will be considered legal.
What Are The Risks Associated With E-signatures?
The main risks associated with e-signatures is identifying the person signing the document.
How do you know that the signature is authentic if it was done behind a screen?
What if someone else forged the signature because nobody was there to witness it?
Also, using e-signatures and online documents can increase the chance of fraud. This is because the document can still be altered once it has been signed.
There are several measures that you can choose to help with the verification and authentication of documents.
Depending on the software you use, there is a range of security measures which are configured into the signing process.
Chain of custody features, timestamps, email and IP tracking are used to track the document from the moment it has been sent to when it has been signed.
So, if you face any legal issues regarding the identity of the person signing the document, these features will help you to figure out whether the e-signature is fraudulent.
Signing software providers also encourage their users to verify their identity by using certification authority.
Certification authorities are secure online databases that can be accessed by uses of the signing software.
First, the signer has to provide specific information to the certification authority.
They are then given a digital signature certificate which you can use to verify the identity of the person signing your document with an e-signature.
As with any signed documents, it is important that you and the other people signing the document have your own individual copies.
So, if there are any inconsistencies with what was signed you will always have an original copy of the document that was signed.
What To Take Away…
The push to placing document services online is only going to keep growing.
The benefits associated with the use of e-signatures sees many small businesses and startups completing tasks in a less costly and more time efficient way.
If you’re thinking of using signing software for your company, it’s important to know the risks involved and ways you can minimise them.
Any questions about online documents and e-signatures and how you can use them?
Feel free to contact us here or give us a call on 1800 730 617. We are here to help!
Need legal help?
Get a free, fixed-fee quote.
We'll get back to you within 1 business day.