Electronic signatures can be used on legal documentation

The Law Commission has announced that electronic signatures can be used instead of a handwritten signature on nearly all legal or contractual documents following a lengthy consultation.  Helen Porter, Partner in our Commercial Litigation and Dispute Resolution team, here explains more about the move, the areas of legal practice where there are still exceptions and what this means for businesses.

Traditionally, a signature is required to execute a document with the individual required to print their name and having the signature witnessed in a similar format, depending on the nature of the document.

However, recent technological advancements enable electronic signatures to be used alongside clicking a box to confirm the acceptance of the terms and conditions. Courts have previously accepted electronic signatures as validated signatures so long as they conform to necessary requirements, such as the signatory intending to authenticate the document and that the signature is witnessed.

There has been speculation as to whether these electronic signatures are legally binding, up until now.  This new report from the Law Commission has confirmed that electronic signatures are as valid as ‘wet’ signatures and can be used in a wide range of capacities including as evidence in legal proceedings, on deeds from trust documents, commercial deals, personal financial transactions and across Government.  The timing of the report is particularly useful as HM Land Registry is pushing towards full digital conveyancing.

Exceptions to electronic signatures

While this is the overall message regarding electronic signatures, the full 124 page report from the Law Commission points to some areas that still lack clarification.  The areas concerned are writing Wills and when registering dispositions under the Land Registration Act 2002.  These areas will now be subject to separate proposals.

The rule from the Law Commission also does not extend to witnessing signatures.  In the consultation document last year, it was proposed that electronic signatures would be allowed to be witnessed via a video link.  The final report however does not confirm this, stating that the phrase ‘in the presence of a witness’ still implies that this should be a physical presence.  HM Land Registry concurs, saying that there would naturally be concerns over a person witnessing a document when they cannot be sure of the data string attached to that document unless they are physically present.  The report goes on to say that confirmation of this matter will be provided in the future through an ‘industry working group’.

The future for electronic signatures

The Law Commission has recommended that their industry working group consider the practical and technical issues for businesses relying on electronic signatures, particularly for their legal documentation, including the challenging area of witnessing, and provide best practice guidance.

There will no doubt be relief from businesses over this ruling who may have been cautious about proceeding with certain deals that relied on electronic signatures, unsure as to whether this would constitute as legally binding.  This ultimately has been leading to delays and occasional disputes about validity of the documents.  With this decision, businesses should be preparing themselves, if they have not already, for the continued growth in this technology, protecting themselves against the potential risks that can be coupled with this, such as fraud or opportunities for hackers to intercept emails and documents. 

Helen Porter notes that there is concern that e-signatures are more susceptible to fraud and could put vulnerable people at risk.  It is therefore imperative that where e-signatures are relied on to execute a document, that the correct authentication formalities are followed.  Helen would welcome Government codification of the law on e-signatures and the recommended best practice guidance to avoid possible mis-use.  You can contact Helen to discuss this further by emailing helenporter@warnergoodman.co.uk or calling 023 8071 7412.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.