It has become increasingly common for documents to be signed electronically. This can be a very convenient way of signing and storing documents.
However, there are more and more cases where electronic signatures are being challenged, and documents being considered unenforceable as a result.
The issues are well demonstrated in a recent case of Bendigo and Adelaide Bank Limited v Pickard  SASC 123.
The Pickards, through a family trust, subscribed for interests in Great Southern Group investments, and borrowed through Bendigo and Adelaide Bank. The Pickards were required to guarantee the borrowings.
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. The evidence was that the company’s practice for document signing was that 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.
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, they had not been properly signed, and therefore the guarantees could not be enforced against the Pickards.
The importance of systems and records
This case illustrates the risks with electronic signatures, and the importance of having systems in place to prove the person actually authorised the signing of the document electronically.
If important documents are being signed electronically, then records should be kept to show that the people signing were the ones who affixed the signatures, or the documents might be unenforceable and ineffective.