Current social distancing rules may mean that physical “wet ink” signatures are difficult to obtain, whether face-to face or by scanning copies of signed originals. As such, this note provides a general overview of when electronic or digital signatures might be acceptable under English law.
What is an electronic signature?
It is defined as data in electronic form which is attached to or logically associated with other data in electronic form, and which is used by the signatory to sign.
An electronic signature may only be used by a natural person, and may not be used by a legal person, such as a company. This means that an authorised signatory, such as a director, will use his electronic signature on behalf of the company.
The most important consideration of an electronic signature is that it is a clear indication by an identifiable person of their acceptance of the document they are signing.
Types of electronic signature
There are many types of electronic signature. For example:
- The signatory typing their name or initials on an electronic document, such as an email or a Word document.
- Including an image of a manuscript signature in an electronic document.
- Clicking an “I agree” on a website.
- Signing an electronic document via a touchscreen.
- Using a digital signature platform (such as Adobe Sign). A digital signature is more a technologically advanced and potentially safer form of electronic signature.
It should be noted that some types of electronic signature will be easier to forge (or later claim to have been forged) than others.
Legal validity of electronic signatures
In English law most commercial and consumer contracts can be made informally and do not need to be signed or even recorded in writing. This means that, if the parties to such a contract do put it into writing, an electronic signature will be valid.
However, there are some types of contract which the law requires to be put into writing and signed, and the position is more complex when electronic signatures are considered. Examples include:
- Contracts for the sale of land.
- Transfers of registered securities.
- Regulated credit agreements.
- Powers of attorney.
- Copyright assignments.
Electronic documents will generally satisfy a legal requirement for writing and electronic signatures can meet a legal requirement for a document to be signed. However, there are some documents where it is not possible and in every case great care must be taken that the form of the electronic document and the means of electronic signing are adequate and comply with any statutory formalities.
When should an electronic signature not be used?
There may be occasions when it is not permitted or appropriate to use an electronic signature, for instance:
- lasting powers of attorney
- most transfers of land (although there are plans to make electronic signatures viable)
When the parties to a contract are in different countries, advice must be taken in every country involved that electronic documents and signatures are legally valid and enforceable in that jurisdiction, in the form intended to be used.
Can a document have a mix of real and electronic signatures?
In general, this is possible. As the signature on most contracts is merely the relevant party’s acceptance of the terms, it does not matter if that acceptance takes different forms for each party.
Electronic signatures and deeds
In English law, a deed is a document signed in a particular way (usually with witnesses). It may be used because of a legal requirement, or voluntarily because in some cases it makes a particular obligation easier to enforce.
To be valid and binding as a deed, the document must meet strict statutory requirements. These include the witnessing of the signatures of individuals. The witness must be physically present when the deed is signed, which means that, even if an electronic signature is used, the witness must be in the same place, at the same time, as the signatory when they apply the electronic signature. Some e-signing platforms specifically provide for the witnessing of signatures.
The witness should be independent of the signatory. There is much debate about what “independent” means, but it is generally advised that witnesses should not be close family members of the signatory. With the current lockdown and social distancing, this could be difficult to achieve.
Companies have the choice, when executing deeds, of signature by one director, whose signature is witnessed, or signing by two directors (or one director and the company secretary). Given the potential problems with witnesses, it would be advisable for companies to follow the “two signatory route”, particularly given that the two signatories do not have to sign in the same location or at the same time.
If a document has not been signed in an acceptable manner, then it may mean that part of or all of the document is not valid and therefore not enforceable. If you have any questions about this article or any of our other areas of specialism, please feel free to get in touch. We are here to help – so let’s talk.