Is the use of an Electronic Signature legally compliant?

Electronic Signatures For Legal Documents

The Law Commission have confirmed that documents signed electronically, even when a statutory requirement for a signature predates our digital age, have legal force.

This is an extremely helpful attempt to clear up lingering doubts over the issue.

In the final report of a government-commissioned study, some 124 pages long, the commission states that in ‘most cases’, electronic signatures can be used as a viable alternative to handwritten ones.

You may be thinking that businesses and individuals already sign millions of contracts electronically every day, from doorstep delivery receipts to settlement agreements, all the way to multi-million-pound deals.

Despite this, many solicitors, businesses and individuals, still have doubts over when an electronic signature can be used in a particular situation.

What’s the problem?

Most readers will have experience of signing a document of some form or other, whether it be a contract of employment; a notice of termination; an IP and Trade secret agreement or an agreement containing restrictive covenants.

The common law in England and Wales has however always been flexible in recognising a range of types of signature, including signing with an ‘X’, initials only, a printed name, or even a description of the signatory such as ‘Your loving mother’. Most however will be signed with a person’s normal signature. Further, the courts have accepted electronic forms of signatures including a name typed at the bottom of an email or clicking an ‘I accept’ tick box on a website.

The issue has arisen as email has made the daily post too slow for today’s clients; and as a reminder of how the legal profession still lags far behind other industries in its use of technology. Electronic signatures are also of course, much more convenient and speedier than having to print off a page, sign it and then return it to wherever it needs to get to and paying for postage. It also reflects the attempt of the profession to go green, and to go paperless.

However, it has been confusing when an original signature is required or not. This report confirms the situation.

The report

The report makes it clear that an electronic signature can generally be used in place of a handwritten signature as long as the usual rules on signatures are met.

The report opens with a statement of the law as assessed by the commission. It concludes that an electronic signature is capable in law of executing a document provided that the person signing intends to do so and that any further required formalities, such as a witness, are satisfied.

However, the commission dashes hope of the legal profession accepting other methods of signing documents, for example by categorically stating that remote witnessing over video links such as skype, would not be valid. In the commissions view, a document which must be signed “in the presence of a witness” requires the physical presence of that witness. Therefore, for now, the witnesses and signatory will still have to be physically together.

The commission, rather unsurprisingly, echoes the Law Society’s warning that the rush to encourage people to apply online for lasting powers of attorney for example, could put individuals at risk of fraud, in the event remote witnessing and electronic signatures are accepted. The commission states that further assessment and technological advances need to be made to ensure such methods are secure and reliable. This appears sensible.

The future

The commission makes several general recommendations to address some of the practicalities of electronic execution and the rules for executing deeds in particular.

The suggestions make clear that further assessment is considered necessary before signatures and witnessing becomes completely electronic, and includes:

1. Setting up an industry working group, to consider practical and technical issues around electronic signatures and provide best practice guidance for their use in different types of specific transactions;
2. Further consideration of solutions to the practical and technical obstacles that exist to video witnessing;
3. A review of the law of deeds, to consider broad issues about the effectiveness of deeds and whether the concept remains fit for purpose;
4. The commission also says the government may wish to consider codifying the law on electronic signatures in order to improve the accessibility of the law.

For now, there is some clarity but as in everything, solicitors, businesses and individuals will all have a preferred method of signing and executing a document and it remains open for the parties to specifically agree the method of executing a document. We now just have another way.

Links

https://www.lawcom.gov.uk/project/electronic-execution-of-documents/

Don’t forget getting advice from a Solicitor does not have to be complicated or costly!

Photo by Kelly Sikkema on Unsplash