Earlier this year we asked ‘Do you trust e-signatures?‘. Whilst the response from business has been generally positive, lawyers have been more reticent. The absence of clear legal authority, and concerns about satisfying the more onerous requirements for deeds, means electronic signatures are yet to be widely adopted.
Change is in the air
The Law Commission recently published a consultation paper setting out proposals for reform and seeking the views of stakeholders to ensure the law on electronic signatures is sufficiently certain and flexible. The consultation focused on:
- the use of electronic signatures to execute documents where there is a requirement that a document must be ‘signed’; and
- the electronic execution of deeds, including the requirements of witnessing, attestation and delivery (there are no plans to make changes to the traditional approach to executing deeds when applying a ‘handwritten’ signature – these proposals only relate to electronic execution of deeds).
The current position
The Law Commission has previously confirmed that existing legal requirements relating to signatures can be satisfied electronically in most scenarios. This conclusion has been strengthened by the introduction of UK and EU legislation and various key cases which have, in general, concluded that electronic methods of signing can satisfy the statutory requirement for a signature where there is an intention to authenticate the document.
Lack of certainty
The Law Commission may have concluded that the law is flexible to allow for the use of electronic signatures, but many stakeholders would like a clear legislative statement confirming that this is the case before adopting their use more widely. Although some businesses are using electronic signatures, others are concerned about their legal validity. It is this uncertainty and lack of clarity which is preventing e-signatures from becoming commonplace.
Despite this, the Law Commission does not think a legislative statement is needed at this stage. As an alternative, it has suggested that a test case could be brought to get an authoritative ruling on the use of electronic signatures in particular circumstances. But so far, no one has taken up this suggestion.
It is also proposed that a government-backed working group could be established to provide guidance and advice on the practical and technological issues affecting electronic execution.
Did you see what he did there?
Some legal documents, particularly deeds, require an individual’s signature to be witness. The Law Commission says that this means the witness must be physically present when the document is signed. Agreeing with the nervous lawyers the Law Commission says parties cannot be confident, based on current law, that witnessing the execution process on a screen would be sufficient. But rather than removing the requirements for a witness, the Law Commission has suggested some potential options to allow for more flexibility when signing deeds electronically.
Maintaining the requirements for witnessing and attestation
A witness could observe the application of an electronic signature through video link, and then that witness could attest the signature either:
- through a signing platform where the witness can see the signatory’s electronic signature on the document and can then apply its own signature to complete the attestation; or
- by applying their own electronic signature to a copy of the document which is emailed to the witness by the signatory after they have signed it.
The view is that witnessing over video link is sufficiently similar to witnessing in the physical presence of the signatory and so should be permitted. If this proposal was to be implemented, the other requirements for a validly executed deed would remain the same.
Reforms departing from witnessing and attestation
Other scenarios have been considered in which the witness does not actually observe the signing electronically, but where it can be deduced from other evidence that it was in fact the signatory who signed.
Using a signing platform without a video link would allow the signatory and witness, in different locations, to log in to a secure online platform. The witness would see the signatory’s signature appear on screen and then apply their own signature to the same document to satisfy the attestation requirement. This would satisfy the witnessing requirement but to a lesser extent than physical witnessing.
The Law Commission has also proposed a new concept of ‘electronic acknowledgement’ where the signatory signs the deed electronically and then, acknowledging to the witness that they have signed it, sends it to the witness. The witness would then sign the document with their own electronic signature and include a statement that the signatory had ‘acknowledged’ their signature.
The ‘acknowledgement’ could occur in writing, in person, or by video link (after the signing) or by telephone but the witness must see the signatory’s signature on the document before applying their own. So unless an online platform is being used, the signatory would need to send the signed document to the witness (likely to be via email) and acknowledgement and witnessing would need to take place reasonably soon after the signing, perhaps within 24 hours.
However such a radical change would require a significant legislative amendment and so would not be implemented without further consultation.
Is the deed done?
There is a view that the concept of deeds, and the related formalities, are outdated and in need of review. Many believe that deeds should be abolished, at least for some types of transaction. The consultation paper asks for opinions on whether a broader review into the law of deeds should take place in the future.
This blog post was written by Elliot Gibson. For further information, please contact Sophie Brookes:
Sophie Brookes, partner, Corporate team
T: 0161 836 7823