Ink V IT

There is an increasing demand for modern more convenient ways of entering into binding transactions. Electronic signatures are just one way that technology is changing how we sign, seal and deliver these transactions. But are they valid?

With the increased use of electronic signatures, comes uncertainty about whether documents signed in this manner will be valid and enforceable and many people still prefer “wet-ink” signatures. While the relevant UK legislation deals with the admissibility of electronic signatures, it does not expressly deal with their validity.

Law Commission Consultation

To address this the Law Commission have published a consultation which focuses on:

1.  the use of electronic signatures to execute documents where there is a statutory requirement for a signature; and

2. the electronic execution of deeds, including the requirements of witnessing and attestation and delivery.

In their provisional view the commission explains they are satisfied that electronic signatures can meet the necessary statutory requirements to ensure the relevant document is valid and enforceable. The commission concluded that the current law caters adequately for electronic signatures and that they are not considering any amendments to the current legislation.

How can you sign documents by electronic signature?

While the current legislation is not prescriptive, the guidance from the Law Society and the Law Commission suggests documents (such as contracts, meeting minutes and resolutions) may be electronically signed using a variety of methods:

1. typing their name into a contract or into an email containing the terms of a contract;

2. electronically pasting their signature, in the form of an image, into the contract in the appropriate place;

3. accessing a contract through a web-based e-signature platform and clicking to have this inserted into the contract in the appropriate place; or

4. using a finger, light pen or stylus and a touchscreen to write their name digitally in the appropriate place in the contract.

It is worth noting that, while it is advisable to do so, there is no need under English law for contracts to be in any particular form, in writing or signed by the parties. Contacts may be entered into orally, provided there is offer and acceptance, consideration, certainty of terms and an intention to be legally bound.

What about documents with formal rules about signing and executing?

Some types of document are subject to specific formalities imposed by statute, including a requirement for the document to be in writing and/or signed and delivered as a deed. Examples include:

1. a guarantee, or promissory note;

2. a contract for the sale or other disposition of an interest in land in England and Wales; and

3. an assignment of copyright.

The guidance suggests that parties may electronically sign these documents, but that they should ensure they comply with the specific statutory requirements.

For example, although there are various ways of validly executing a deed, a witness is often required to attest the signature. The Law Society guidance suggests that both the relevant signatory and witness may sign the deed electronically, but that the witness must be physically present at the signing.  This view is shared by the Law Commission and suggests that arranging to witness an electronic signature via screen-sharing or video-link should be avoided for now.

What next?

The Law Commission stresses that its proposals are provisional and will be finalised following public consultation. It also proposes further steps that could be taken to clarify the law and is considering the following options:

1. Establish a group of industry experts, set up by the government, to monitor the use of electronic signatures and advise on potential changes.

2. Use webcam or video links instead of a physical witness.

3. Move away from traditional witnessing in person to:

• a signing platform alone, where the signatory and witness are logged onto the same programme from different locations;
• enabling a person to ’acknowledge’ that they applied an electronic signature to a witness after the event; or
• abolishing the requirement for witnessing and attestation of a signature altogether.

4. Investigate whether the concept of deeds is fit for purpose in the 21st century.

The consultation closes on 23 November 2018.

This article is an insight into the changing outlook on electronic signatures, but whether a document is validly executed is likely to depend on the specific facts concerned. If you have any queries about your documents, or for a free consultation, please call Henry Mullen on 0191 211 7894 or email [email protected]