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Electronic signatures, or e-signatures, are now common in New Zealand. This is partly due to the COVID-19 pandemic, which prohibits people from signing documents in the traditional face-to-face way. If your business is looking to adapt to this new way of working, you may be wondering if electronic signatures will work for you. They can save your business time and money. This article will outline the situations where you can use electronic signatures, what criteria your electronic signatures will need to meet to be valid and some suggestions as to which type of electronic signature may be best for your business. 

How Can I Use Electronic Signatures?

Electronic signatures will likely become more and more common as the business environment continues to change to rely on technology more and more. They allow you to send and sign digital documents online, without needing to print or return signed documents with a handwritten signature. You can use electronic signatures to sign several types of contracts, including business contracts, employment agreements, leases, and many others. Additionally, you can even use them for the sale and purchase of real estate. Finally, you can also use e-signatures to sign trustee, shareholder and director documentation.

For the most part, electronic signatures are just as valid at law as handwritten signatures. Therefore, you can treat them as original documents to conduct business. However, some documents or businesses cannot use electronic signatures. Firstly, government departments are often more reluctant to use electronic signatures. Notably, any documents that relate to elections cannot use an electronic signature. Furthermore, you cannot electronically sign any documents used in courts, tribunals, or elsewhere in the justice system. 

In addition, some other exclusions are:

  • power of attorney or will documents;
  • affidavits, statutory declarations or any other documents that must be sworn under oath;
  • documents that relate to entering property, like search and seizure warrants; and
  • documents required under the Fair Trading Act, including product safety standards or food safety documents.  

What Makes an Electronic Signature Valid?

The Contract and Commercial Law Act 2017 (CCLA) governs the use of electronic signatures. The act provides that electronic signatures can be just as enforceable as written signatures, so long as they meet the specific requirements of identification, reliability, and consent. In more detail, these requirements are:

  1. the owner of the signature and their intention to sign the document must be clearly identifiable;
  2. the method of signing must be as reliable and appropriate as possible, depending on the circumstances; and
  3. all parties must consent to the use of electronic signatures. 

Therefore, complying with these three requirements will mean you have a valid electronic signature.

But, what does it mean for the signature to be reliable? Generally, there are a few factors to consider when deciding if something is reliable or not. These are whether:

  • you can link the signature to the person signing the document and no one else;
  • the electronic signature was created securely and in a way where you cannot alter it; and
  • the information within the document is secure, with clear indications of any information changing after the e-signature takes place.

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What Types of Electronic Signatures Can I Use?

We use signatures to show the security and legitimacy of documents, so any e-signature methods your company uses must ensure this. However, there are a few different types of electronic signatures. You can use: 

  • a digital signature;
  • an electronic symbol; or 
  • some other sort of reference, including an email signature.

A digital signature will be the most secure method. Furthermore, there are a few different types of software that your business can use to create electronic signatures. You should encrypt your signature forum and verify it using code to ensure that it is as secure as possible.

Usually, software that creates digital signatures will come with a price, which can be a commitment for your business. However, electronic symbols and other references are much less likely to be secure and could be challenged in future based on their lack of reliability. 

Key Takeaways

If you want your business to adapt to both the COVID-19 pandemic and the increasing use of technology, allowing for electronic signatures is a good idea for electronic transactions. This is because almost all businesses and documents can use online signatures, with notable exceptions being court documents or other documents sworn under oath. However, if you choose to use electronic signatures in your business, you must ensure that these signatures meet the identification, reliability and consent requirements outlined above. The best way to do this is to ensure that your method of gaining signatures is as secure as possible, which is usually through digital signature software. 

If you need help with electronic signatures or other commercial transactions, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

Can all of my business documents be signed electronically?

No. You cannot sign any documents that must be signed under oath, any documents relating to wills or power of attorney, or any documents that allow for search and seizure of property. However, it is unlikely that these documents will frequently be used by businesses. 

Is it as simple as just writing my name?

No, you should use software or another program to ensure that your signatures are secure. This makes sure that you comply with the identification, reliability and consent criteria that are required for a valid online signature under the CCLA.  

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