Are electronic signatures legal in New Zealand?
Yes, an electronic form of signature is recognized as a legal signature under most circumstances in New Zealand. In fact, when certain legal requirements are met, electronic signatures are considered to be equal to handwritten signatures.
Modern technology and new legislation now allow for legal transactions to be performed electronically from start to finish, including the use of electronic signatures as an acceptable approval of the information. The New Zealand law which initiated the protection and legitimacy of electronic signatures is called the Electronic Transactions Act (ETA) of 2002.
The acts – The New Zealand Electronic Transactions Act 2002 & Contract and Commercial Law Act 2017
The New Zealand government adopted The Electronic Transactions Act 2002 in order to adapt to the changing business landscape at the turn of the century. The rise of technology often makes it more efficient to accept the terms of a transaction through the use of electronic signatures instead of the traditional ways of signing documents. The Act deems that an eSignature is valid and legally binding when the circumstances under which the legal requirements for document signatures are met. The ETA also defines the point at which eSignatures are legally binding even in the circumstance that there is no legal prerequisite for the signatures on a document.
The two key principles of The Act are:
- The “functional equivalence” principle states that electronic transactions and on-paper transactions are both valid and recognized under the law.
- The “technological neutrality” principle states that the law does not support or favor one form of transaction or technology over another. making it well-placed to keep pace with the speed of changing technology systems.
Part 4 of the Contract and Commercial Law Act 2017 (previously the Electronic Transactions Act 2002) is the newest legislation for electronic transactions and eSignatures.
The main purpose of Part 4 of the Act is to:
- reduce uncertainty around the transmission and legal effect of information electronically; and
- provide for certain paper-based legal requirements to be completed electronically.
eSignature versus digital signature
A digital signature is different from an eSignature; A digital signature is a form of electronic signature which offers a more secure form of encryption technology and complies with specific criteria to ensure digital signatures can be used and trusted in the same way as handwritten signatures.
The reliability of eSignatures
When can documents be signed with an eSignature in New Zealand?
The Electronic Transaction Act of 2002 grants a presumption of reliability to eSignatures and provides guidelines for when the burden for being “as reliable as appropriate” is met.
The following are the conditions for eSignature reliability in New Zealand:
- The eSignature was generated under the signer’s full and total control and under no duress or persuasion from another party.
- The eSignature, as generated, was linked only to the signer and not to any other party.
- The eSignature is used to support and guarantee the validity or approval of the information or document to which it is applied or affixed.
- There are means by which to detect any alterations made to the eSignature after it has been created initially to protect the integrity of the information.
Additionally, the ETA also takes into account several considerations when judging the reliability of an eSignature:
- Technology – What kind of software, hardware, or equipment was used to generate the final document? Was the technology up to a reasonable standard of security and sophistication?
- Transaction – How large is the transaction? What kind of transaction is it? The reasonable burden for reliability goes up with the transaction grows in size or importance.
- Nature and Relationship – What is the nature of the transaction, and how often do the two parties do business with one another? Generally speaking, the burden of reliability shrinks if the eSignature relates to a kind of transaction that occurs often and such documents are signed routinely.
- Practice – Does the transaction follow standard practices for trade?
- Substitutions – Are there other means of identification available to seal and verify the transaction, and are those means reasonable to implement within the context of that transaction?
What documents does the ETA cover?
As stated earlier, the ETA is concerned with electronic communications where there is a legal prerequisite that they are sealed with a legally binding signature.
These types of documents include:
- Commercial Contracts – The ETA covers commercial contracts between two or more business entities such as sales contracts, service agreements, nondisclosure agreements, contracts, etc.
- Employment Paperwork – Some documents pertaining to employment can be signed with an eSignature, such as employment contracts, benefits documentation, other certain documents involved with accepting new employment and onboarding, etc.
- Real Estate – Some contracts, such as leases, can be signed using an eSignature.
- Intellectual Properties – Copyrights, patents, and trademarks can be sealed with an eSignature.
- Consumer Agreements – eSignatures are valid on some consumer agreements.
Not all documents can be signed with an eSignature, though. Documents of grave importance often require an on-paper signature, such as:
- Arrest warrants;
- Powers of attorney;
- Documents presided over by legal oath;
- Intellectual property transfers;
- Bills of landing;
- Real estate transference contracts.
How can I use PandaDoc eSignatures in New Zealand?
PandaDoc fully complies with eSignature laws in 42 countries including New Zealand. Designed to make paperwork less time-consuming and more efficient, the convenience of PandaDoc eSignatures frees you up to manage your business, track the status of your business documents and more.
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Allow your customers to sign any documents securely from a mobile device or a computer by letting options – type, draw or upload their signature that speeds up the entire sales process.