With the outbreak of COVID-19 and the UK lockdown extended by at least another three weeks, the practical effectiveness of electronic documents and electronic signatures remain in focus.
WHAT ARE “ELECTRONIC SIGNATURES”?
Electronic signatures include:
- The signatory typing their name or initials at the end of a document.
- A scanned handwritten signature.
- Using Adobe Sign or DocuSign to generate an electronic representation of a handwritten signature.
ARE ELECTRONIC SIGNATURES VALID?
In English Law, most contracts are not required to be in any particular form, and they can even be made orally. That being the case, unless parties agree otherwise, an electronic signature will be valid, as usually there will be no requirement for a signature at all.
However, with certain types of contract, the law dictates that they are executed in writing or as a deed. Some examples of contracts that must be in writing include:
- Contracts for the sale of land.
- Transfers of registered securities.
- Powers of attorney.
The question that arises is whether an electronic signature meets the requirement for a contract to be executed in writing.
Recent case law confirms that electronic signatures in general meet the, “in writing” requirement. Similarly, the Law Society has also confirmed that an electronic signature of a contract or deed satisfies this requirement.
The Law Commission also supports this position but have reiterated that two points must apply for an electronic signature to be valid.
1. The signatory must intend to be bound by the contract they are signing; and
2. Any execution formalities must be complied with. An example of such formalities is the requirement for a signature to be witnessed in a deed.
SO WHEN CAN YOU NOT USE AN ELECTRONIC SIGNATURE?
There are notable exceptions to documents being valid when executed with an electronic signature.
These must be physically signed by the person making the will and his/her signature must be witnessed by two independent witnesses present at the time of signature.
As a result of the Coronavirus outbreak the Government have looked to relax the current laws surrounding the witnessing of wills.
Read more about the Government’s proposals in my colleagues Tyla’s article on our website: https://www.jpclaw.co.uk/latest/covid-19-and-witnessing-of-wills
2. Land Transfers:
HM Land Registry will not accept electronic documents with electronic signatures on a transfer of property. However, The Chief Land Registrar can issue notices to allow certain documents to be accepted but only if they contain an advanced digital signature. This presently is restricted to electronic mortgage deeds but only if the Land Registry’s own digital mortgage service is used.
3. Company Documents:
Company representatives should ensure they have the authority to use electronic documents and should check their constitutions to confirm that their mem and arts do not prohibit electronic signatures.
4. Some Cross Border Transactions
In the case of cross-border transactions, it is essential to ensure that the method of execution is valid in the relevant jurisdictions. The current position is that due to fears of the validity of electronic signatures across different jurisdictions, many will still require a wet-ink signature.
WHAT ABOUT PUBLIC REGISTRIES – HOW DO ELECTRONIC SIGNATURES WORK WITH THOSE?
· Companies House.
Most documents can be filed online, and electronic signatures are usually accepted.
HMRC would normally only accept wet-ink signatures on documents where stamp duty is payable, such as a stock transfer form, however in light of the COVID-19 outbreak, they are now accepting electronic documents with electronic signatures.
· The Office for the Public Guardian
Will only accept lasting powers of attorney in wet-ink.
CAN ELECTRONIC SIGNATURES BE USED IN LEGAL PROCEEDINGS?
Electronic signatures are admissible as evidence in legal proceedings. If it is alleged that an electronic document is not authentic, the person making that claim must prove this on the balance of probabilities. Documents electronically signed using DocuSign or Adobe Sign have an audit trail which is admissible evidence in court as to the authenticity of an electronic signature and an electronic document.
CAN ELECTRONIC SIGNATURES BE USED TO EXECUTE DEEDS?
As referred to above, electronic signatures can be used to execute a document provided the person signing intends to authenticate it and other formalities are complied with.
Where a deed is executed by an individual, it must be signed in the presence of a witness. Where a deed is executed by a company, it must be executed by either two authorised signatories or by a director in the presence of a witness.
A witness can also attest the deed by signing electronically, but notably The Law Commission have stated that a witness needs to be physically present when the signatory executes the deed. There are considerations to allow documents to be witnessed by video but at present this is not permitted.
If you have any questions about how to approach electronic signatures, please contact Alex Porter by email on email@example.com by telephone 0207 644 7273 or connect with him on LinkedIn, or Steven Porter, Partner by email on firstname.lastname@example.org or by telephone 0207 644 6091 or connect with him on LinkedIn.