n this update, we have focussed on the headline governance and regulatory issues that are facing RPs at this time. as we all deal with the Covid-19 crisis.
The Law Commission published a report on 4 September 2019 detailing its view that electronic signatures are a valid form of executing documents.
What is a legally binding contract?
It is important to remember that contracts can form and be binding, even when the terms aren’t written down. Contracts can be created, provided there is an offer, acceptance of that offer, an intention to create a legal relationship and valid consideration has been given (some form of exchange between the parties). A legally binding contract can be formed through the exchange of emails or even over the phone, without the need for a signature.
However, there are exceptions to the general rule, one being where the contract or deed must be in writing or witnessed.
Witnessing and attesting deeds
For some documents, such as deeds, there is a requirement for it to be signed in the presence of a witness. The Law Commission is not confident that the current law allows for “remote” witnessing, i.e. where the witness is not physically present when the deed is executed. Therefore, if you are witnessing a deed, you must be physically present at the time the deed is signed for valid execution, even if the signature is in electronic form.
The Law Commission considered two potential options for the future of witnessing documents:
- Witnessing via video link through a signature platform – here the witness could attest to the fact that they have seen the document being signed, but they were not in the physical presence of the signatory.
- Digital signatures, or another type of technology, which would replace witnessing and attestation.
These are not yet valid methods of executing a deed but may become available in the future.
What is an electronic signature?
The term “electronic signature” refers to any arrangement where a document includes a signature in electronic form, for example, where a piece of paper has been signed manually, and the signature then scanned in electronically.
Digital signatures are a type of electronic signature that use certified-based digital IDs (issued by an accredited Certificate Authority or a Trust Service Provider) to identify and authenticate the signatory. As a result, they are more advanced and secure than other types of electronic signatures because they require some proof that the person signing is who they say they are.
The use of electronic signatures is covered in the European Regulations known as e-IDAS, which recognises three broad types of electronic signatures:
Simple – these include a name at the bottom of an email, a scanned signature, or ticking “I agree” on a website. This is a form of electronic signature but not a digital signature.
Advanced – these signature types require unique identification and authentication of the signatory, which allows verification of the integrity of the signed document. This is a form of electronic signature and constitutes a digital signature.
Qualified – this is the same as advanced (and therefore a digital signature), but there is an additional layer of protection built into the identification and authentication process; the signature is created by using a specific device that is regulated/approved by a qualified supervisory body.
Findings of the Law Commission’s report
The Law Commission’s report concluded that, after many years of debate and discussion, electronic signatures can be validly used to execute documents. The main findings of the report were:
- Unless the contrary is provided (either by law or document), a pragmatic approach towards signatures should be followed, in that there is not a prescribed form, type or method. The courts adopt an objective approach considering the surrounding circumstance and electronic signatures are admissible evidence in legal proceedings.
- An electronic signature can be used to execute documents, including deeds, so long as the document is authenticated and the proper formalities for execution are followed (i.e. using a digital signature). The formality requirements for executing documents can be found in existing statute, statutory instruments, contracts, or other private law instruments.
- The courts already accept various forms of non-electronic signatures such as tick boxes, marking initials and signing with a stamp, for example. The Law Commission is of the mind that electronic versions of these would likely be recognised by the courts as being legally valid.
- The Law Commission’s view is that the requirement under current law that deeds must be signed “in the presence of a witness” requires a physical presence of the witness. This should be the case where witnesses are executing or attesting documents electronically.
The Law Commission’s full report can be found here.
For more information, please contact Emma Watt.
Article drafted with assistance from Rumandeep Dhariwal.
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