Legality of electronic signatures confirmed - in depth - Gateley
In depth

Legality of electronic signatures confirmed

Gateley Legal

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In a move to help clarify the law surrounding the use of electronic signatures, the Law Commission has issued a report confirming that these are valid under English law.

As the report notes, lingering uncertainty around the legal validity of documents executed electronically is discouraging some parties from making use of technological solutions that could increase efficiency.

What is an electronic signature?

An electronic signature can take many different forms, such as:

  • a person typing their name into a contract, or into an email containing contractual terms;
  • a person electronically pasting their signature (as an image) into an electronic version of the contract, in the appropriate place;
  • a person accessing a document through a web-based e-signature platform and clicking to have their signature inserted in a handwritten font, in the appropriate place; and
  • a person using a stylus to sign on a touchscreen.

Whilst all of these had previously been identified as valid, there were concerns about whether they can meet the specific formalities of certain requirements.

What are the concerns about electronic signatures?

The Law Commission report identified various problems with the current position relating to electronic signatures, including:

  • there is no single piece of legislation setting out the law on electronic signatures;
  • there are practical and technical challenges when considering whether to execute electronically, such as the evidential value of a particular type of signature and the security and reliability of different technologies; and
  • the practicalities of the requirement for a deed to be witnessed.

The report aims to address these issues as far as possible under the current law whilst also making recommendations for future actions.

What is the law on electronic signatures?

The Law Commission report sets out a statement of the current law on electronic signatures. The key conclusion is that, under English law, deeds and other documents can be signed electronically provided the person signing intends to authenticate the document and any other required formalities are satisfied.

Electronic signatures are also admissible in legal proceedings, for example, to prove a signatory's identity or their intention to sign the document.

Generally, the law does not prescribe any particular form or type of signature although this is subject to some exceptions in specific legislation or agreed contractual arrangements. Historically, the courts have taken a pragmatic approach and have held that signing with an "X" or with initials only, or using a stamp of a handwritten signature or printing a name, are all valid signatures. There is no reason why the courts would not take a similar approach to electronic equivalents of these forms of signature.

A note of caution about deeds

Whilst the Law Commission has confirmed that deeds can be signed electronically, they also confirmed that the requirement for a deed to be executed 'in the presence of a witness' meant that the witness must actually be physically present. A signature (whether electronic or wet ink) cannot be witnessed remotely, for example over some form of video link. To permit remote witnessing would require a change in the law and the report recommends that this is investigated.

Recommended next steps

The report makes a number of recommendations for future actions, including:

  1. A working group should be established to consider practical issues relating to the electronic execution of documents.
  2. The working group should provide best practice guidance for the use of electronic signatures in different transactions and by different parties.
  3. As well as the working group considering the issue of video witnessing electronic signatures of deeds, there should be a wider review of the law of deeds to consider whether the concept remains fit for purpose.
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