(07) 5597 3366

Electronic signatures – dispute about their validity

Electronic signatures on legal documents

More documents are being signed electronically because it is a very convenient way of signing and storing documents. However, there are cases where electronic signatures can be challenged, and documents found to be unenforceable.

Case review: Challenge to guarantee signed electronically

In the South Australian Supreme Court case of Bendigo and Adelaide Bank Limited v Pickard [2019] SASC 123, the Pickards, through a family trust, subscribed for interests in Great Southern Group investments. They borrowed the money to do this from Bendigo and Adelaide Bank and the bank required the Pickards to guarantee the borrowings.

Loan agreement and guarantee ‘signed electronically’

The loan agreement and guarantee were signed on behalf of the Pickards and their family trust by Great Southern Finance Pty Ltd under a power of attorney. The directors of Great Southern Finance Pty Ltd signed the loan agreement and the guarantee electronically.

When the debt was not paid, the bank sued the Pickards under their guarantee.

The evidence at trial was that the company’s practice for document signing was that their administrative staff, not the directors, physically affixed the signatures. The directors could not prove they authorised the administrative staff to physically affix the signatures on their behalf.

Guarantees held to be unenforceable

The Court decided that, as the directors of Great Southern Finance Pty Ltd could not prove they had authorised the signatures to be placed on the documents, the documents had not been properly signed. As a result, the guarantees were unenforceable against the Pickards.

This case sets out the risks with electronic signatures, and the importance of having systems in place to prove the person actually authorised signing the document electronically.

If important documents are being signed electronically, records should be kept to show that the people signing affixed the electronic signatures personally or the documents might be found to be unenforceable and ineffective.



Legal help available

If you have any queries regarding this article or need legal assistance please call us on 07 5597 3366 or fill out the ‘Contact Us‘ form at the bottom of the page.

Please note that this article has been prepared by Margaret Miller, partner of Bell Legal Group, for information purposes only. It is not legal advice nor should it be relied upon as such.