Misuse of electronic signatures may emerge as a bigger issue than more traditional forgery, Townsends law firm Principal Peter Townsend warns.

“The use of electronic signatures may seem to offer an efficient and convenient way to have documents or agreements signed and returned to another party,” he said.

“But the desire for expediency must be balanced against the need to protect and treat electronic signatures as if they were your real signature.”

He says NSW does not permit electronic signatures for witnessing a document.

His warning follows a NSW court case in which a director’s electronic signature was placed on a guarantee without his knowledge. This led to action (Williams Group Australia v Crocker) by a company seeking to recover the debt from the director personally.

The electronic signature was applied to the documents through an online system in which users receive login details and can upload their electronic signatures. It transpired the director did not change his password, so anyone who knew or had access to his original login details could have put an electronic signature on any document.

The Supreme Court held the director was not liable under the guarantee because his electronic signature was placed on the documents without his knowledge and authority.

The decision was appealed, with the credit company arguing whoever placed the director’s electronic signature on the documents acted with authority.

The appeal held the director’s failure to change his password, and his use of the system on a number of other occasions, did not authorise the use of his electronic signature.