Electronic signatures can be used to execute documents, including on those occasions where there’s a statutory requirement for a signature, the Law Commission has confirmed. This means that, in most cases, electronic signatures can be used as a viable alternative to handwritten ones.
Businesses and individuals are already using electronic signatures on contracts every day, but despite this frequent use, the Law Commission has found that some parties still have doubts over whether an electronic signature can be used in particular situations.
In its latest report, the Commission has set out a simple statement of the law to end that uncertainty and increase confidence in the use of this technology.
Commercial and Common Law Commissioner Stephen Lewis said: “Electronic signatures can offer quicker and easier transactions for businesses and consumers. Our report aims to provide an accessible statement of the law which 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.”
Validity of electronic signatures
An electronic signature is capable in law of being used to execute a document (including a deed), provided that the signatory intends to authenticate the document and that any relevant formalities, such as the signature being witnessed, are satisfied. The Commission’s view is based upon legislation and court decisions which relate to both non-electronic and electronic signatures.
The common law in England and Wales has 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. The courts have considered electronic signatures on a number of occasions and accepted electronic forms of signatures including a name typed at the bottom of an e-mail or clicking an “I accept” tick-box on a website.
These court decisions supplement the EU eIDAS regulation, which states that an electronic signature cannot be denied legal validity simply because it is electronic.
Practicalities of electronic execution
In addition to stakeholder doubts about the legal validity of electronic signatures, the Law Commission has identified some practical considerations which can impact upon the decision to execute documents electronically, including:
*Concerns that electronic signatures are more susceptible to fraud than handwritten signatures, which could put vulnerable people at risk
*Practical issues such as the reliability and security of e-signature technology and the cross-border nature of some transactions which can affect whether parties opt to use electronic or handwritten signatures
*Whether deeds can be witnessed remotely via video witnessing. Where a signature has to be witnessed, the Commission’s view is that the current law probably doesn’t allow for remote witnessing (such as by video link)
Commission’s recommendations and options for reform
The Law Commission has made recommendations to address some of the practicalities of electronic execution and the rules for executing deeds. The recommendations include:
*The creation of 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 transactions
*Video witnessing for deeds with the industry Working Group looking at solutions to the practical and technical obstacles that exist to video witnessing. Government should consider legislative reform to allow for this
*Future review of the law of deeds to consider broad issues about the effectiveness of deeds and whether the concept remains fit for purpose and specific issues which have been raised by stakeholders. The review should include deeds executed on paper and electronically.
The Law Commission’s report confirms that the current law already provides for electronic signatures. However, the Commission has set out an option for reform that Government may wish to consider codifying the law on electronic signatures in order to improve the accessibility of the law.