There is an increasing demand for modern more convenient ways of entering into binding transactions, electronic signatures are just one way that technology advances are providing the opportunity to change the way these transactions are made.
With the increased use of electronic signatures, comes the uncertainty about whether documents signed in this manner will be valid and enforceable, with many still preferring to reply on “wet-ink signatures. While the relevant UK legislation (Electronic Communities Act 2000) 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 on the electronic execution of documents which focuses on:
- the use of electronic signatures to execute documents where there is a statutory requirement that a document must be “signed”; and
- 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 are capable of meeting the necessary statutory requirements to ensure the relevant document is valid and enforceable. The Commission establishes that the current law caters adequately for electronic signatures and that they are not considering any amendments to the current legislation.
How can parties sign documents by electronic signature?
Whilst 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. For example, it may include a person doing any one of the following:
- typing their name into a contract or into an email containing the terms of a contract;
- electronically pasteing their signature (e.g. in the form of an image) into an electronic version of the contract in the appropriate place;
- accessing a contract through a web-based e-signature platform and clicking to have this inserted into the contract in the appropriate place; or
- using a finger, light pen or stylus and a touchscreen to write their name electronically in the appropriate place in the contract.
It is worth noting that whilst 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 specific formalities concerning signature and execution?
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:
- a guarantee, or promissory note;
- a contract for the sale or other disposition of an interest in land in England and Wales; and
- an assignment of copyright.
The guidance suggests that parties may electronically sign the documents, but that they should ensure they comply with the specific statutory requirements.
For example, although there are various methods of validly executing a deed, it is often required that the deed is signed in the presence of a witness who attests 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 to witness the signatory. This view is shared by the Law Commission. This seems to suggest that arrangement to witness an electronic signature via screen-sharing or video-link should be avoided for the time being.
The Law Commission stresses that its proposals are provisional and will be finalised following public consultation and, it proposes further steps that could be taken to clarify and build certainty in the law.
In particular, the Law Commission is continuing to consult on whether:
- The government should set up a group of industry experts to monitor the use of electronic signatures and advise on potential changes;
- Webcam or video links could be used instead of a physical witness for documents which require witnessed signatures;
- There should be a 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;
- or the ability of a person to ’acknowledge’ that they applied an electronic signature to a witness after the event
- or whether the requirement for witnessing and attestation of a signature should be abolished altogether and
- A further project should be carried out on whether the concept of deeds is fit for purpose in the 21st century.
The consultation closes on 23 November 2018.
This article is intended to provide helpful guidance and an update on the status of the Law Commission consultation. It is not intended to give legal advice as to whether a document is validly executed as this is likely to depend on the specific facts concerned.
If you have any queries concerning the execution of documents by electronic signature get in touch for some further help and advice. Please contact Henry Mullen on [email protected] or call 0191 211 7894.