Signing Property Contracts Electronically (including DocuSign)

More and more buyers and sellers are signing their property contract electronically, with DocuSign being the most common tool being used. If not done properly there can be serious consequences including the contract being void.

What is the law?

​A contract signed electronically must comply with the Property Law Act 1974 ​and the three requirements in the ​Electronic Transactions (Queensland) Act 2001​ to be enforceable. The three requirements are:

1. The method is used to identify the person and to indicate the person's intention
2. The method was either:
   1. as reliable as appropriate for the purpose of the contract; or
   2. proven in fact to have fulfilled the requirement to identify the person and indicate the person's intention to be bound by the contract
3. the person consents to the signature method used

Does DocuSign comply?
 
DocuSign may comply with the three requirements as follows:

1. the party to the contract attaches their DocuSign signature (which can be verified as their signature) in the nominated place for signing
2. the email of the parties matches the email the DocuSign is sent to and a verification report is produced
3. A special condition is included in the contract that the parties consent to the use of DocuSign to execute the contract

 
So what are the risks?
 
There are four major risks to keep in mind when signing electronically:

1. The parties may deny signing the contract and allege a third party without authority signed the contract
2. The method (e.g. DocuSign) is ruled not to comply with the Property Law Act 1974
3. Disputes over when the cooling off period commenced
4. Whether the buyer consented to receiving the BCCMA Disclosure Statement via the method and whether it was given before the buyer signed

 
What are our tips?
 
Our three main tips to avoid the pitfalls of electronic signing are:

1. Insert special conditions to cover the following:
   1. Consent by each party to the use of electronic communication for compliance with any statutory requirements to give information (e.g. BCCMA Disclosure Statement, sending of contract to commence cooling off etc.)
   2. Consent to the use of DocuSign (or other method) to execute the contract and deliver the BCCMA Disclosure Statement
   3. A waiver by the parties of the requirement for witnessing signatures
   4. Modify the execution clause by adding a warranty that the signer is the party named in the contract and by signing electronically they intend to be bound
2. If one party signs paper and the other electronically include a special condition that the paper and electronic counterparts are able to be read together and constitute one agreement
3. Familiarise yourself with the rules surrounding the commencement of cooling off and save yourself a nasty, but completely avoidable, headache.

Example special condition

"1.1 The parties acknowledge and agree that prior to the signing of this Contract both the Seller and the Buyer consented to the Contract being electronically signed using DocuSign;

1.2. This Contract may be validly created by counterparts electronically signed by each party using DocuSign and shall together be deemed to constitute one and the same instrument;

1.3. It is agreed that the delivery of a counterpart of the Contract bearing an electronic signature rather than a ‘wet’ signature shall be deemed to bind the party whose signature is so represented;

1.4. For the avoidance of doubt, no witnessing of a party’s signature is required;

1.5. The parties agree to be bound by copies of this Contract which has been electronically signed using DocuSign in accordance with this Special Condition;

1.6. The parties agree that they will be bound by, have complied with and will comply with the Electronic Transactions (Queensland) Act 2001, in relation to the execution of this Contract.​
​
1.7 In this Special Condition 1, Docusign means the secure electronic signature technology system operated by Docusign Inc.​"

If you need help drafting special conditions or have any questions about compliance with electronic signing requirements, please contact us today, we'd be happy to assist you.