Execution of contracts using electronic signing and witnessing – latest development on COVID-19 law reforms

Blog written by King & Wood Mallesons.

In the wake of the COVID19 pandemic, a welcome development has been temporary legislation passed by the Commonwealth and some States (“COVID-19 legislation”) to facilitate the execution of contracts using electronic signatures and audio-visual witnessing.  This legislation overcomes uncertainties in the law on electronic execution of deeds, and remote witnessing.

The focus of this blog, and our other white papers, is contracts (ie deeds and agreements).  We have not discussed other documents such as affidavits, statutory declarations and court documents. There is some COVID-19 legislation which allows for electronic execution and audio-visual witnessing of such documents but the table below only includes legislation which allows for the execution and audio-visual witnessing of contracts.  We also do not discuss the issues around registration of land mortgages and other dealings with land which are registrable with land titles offices over the counter or through the electronic platform Property Exchange Limited (“PEXA”) as this raises technical and procedural issues which vary across jurisdictions.

Latest developments on COVID-19 legislation

UPDATE (11th June 2021): 

We're pleased to announce that the Commonwealth, State and Territory Treasurers has agreed to prioritise working together towards a common approach for document execution. It’s a key contribution to the Government’s Deregulation agenda, and the Deregulation Taskforce’s Modernising Business Communications deep dive. Find out more here.

The temporary measures introduced under COVID-19 legislation in VIC have been made permanent and the COVID-19 legislation in QLD has been extended for another 6 months. The VIC legislation validates the use of electronic deeds, electronic signatures on deeds and permits witnessing of a broad range of documents (including deeds and agreements) by audio visual link. The QLD legislation validates electronic deeds, electronic signatures on deeds and permits witnessing of certain documents by audio visual link.

Temporary measures, which were introduced by the Commonwealth government to overcome uncertainties in the law on electronic execution by companies under s127 of the Corporations Act 2001 (Cth) (“Corporations Act”), unfortunately expired due to unexpected inaction by the Commonwealth government before its expiration.  The Commonwealth government had issued draft legislation to extend the temporary reforms to s127 and indicated that the changes would be made permanent before the temporary measures expired. Unfortunately, the draft legislation was not passed in time. As a result, the pre COVID-19 position on electronic signing under s127 applies, which leaves open the ambiguity of whether a “document” for the purposes of s127 must be a paper document thereby precluding the use of electronic signatures in those specific use cases. Given previous statements from the Commonwealth government that they intend to make permanent reforms to s127, there is a general confidence in industry that legislation to permanently clarify that electronic signatures can be used under s127 will be passed by the government once the legislature is back in session later this year.

While developments in VIC and QLD and the anticipated passage of s127 legislative reform are encouraging reaffirmations of the broad acceptance of electronic signatures in Australia, the Australian Banking Association, together with other organisations including King & Wood Mallesons and DocuSign, continue to engage with the Commonwealth and the States and Territories, to advocate for further broad and consistent adoption throughout the country of electronic signatures.   

Status of COVID-19 legislation

The current COVID-19 legislation which allows for the electronic execution of contracts and audio-visual witnessing is set out below.  Further information can also be found at http://docusign.com.au/electronic-contracts and https://www.docusign.com.au/white-papers/promoting-greater-usage-of-electronic-contracts-and-electronic-signatures-under-australian-law.

As noted above, the table lists all relevant COVD-19 legislation that allows for the electronic execution and audio-visual witnessing of contracts. The legislation listed in the table, and legislation in other jurisdictions, may cover other types of documents such as affidavits, statutory declarations and court documents. For example:

• In ACT, the COVID-19 Emergency Response Legislation Amendment Act 2020 (ACT) permits witnessing and attestation of a limited range of documents by audio-visual link. These documents are affidavits, wills, health directions under Medical Treatment (Health Directions) Act 2006 and general powers of attorney or an enduring powers of attorney.  They do not include contracts.
• In WA, the COVID-19 Response and Economic Recovery Omnibus Act 2020 (WA) allows witnessing of documents under certain legislation to take place by audio-visual means (eg affidavits) and various other processes to take place by electronic means (issue of certain notices, lodgement of these or the giving of evidence).
• In SA, the COVID-19 Emergency Response (Section 16) (No 1) Variation Regulations 2020 (SA) has suspended the witnessing requirement for land mortgages.
• In NT and TAS, as of the date of this blog, no regulations have been passed impacting the validity of electronic signatures.