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The validity of e-signatures

31/10/2016

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United Kingdom

A recent Note issued by a joint working party of the Law Society and the City of London Law Society has done much to increase confidence in the validity of electronic (or "e"-) signatures

The validity of e-signatures

A recent Note issued by a joint working party of the Law Society1 and the City of London Law Society  has done much to increase confidence in the validity of electronic (or "e"-) signatures.  A short explanation of the position under English law and a minor word of warning may assist.

Most contracts can be made electronically, for example by e-mail or web-site trading, but uncertainty can arise where English law requires some additional formality for a contract or instrument, including that it be "signed". 

The EU has re-visited the issue in the eIDAS regulation2 which covers the effectiveness of e-signatures and distinguishes between different forms of e-signature.  "Qualified electronic signatures", which are an advanced form of electronic signature created by a qualified electronic creation device, are given equivalent legal effect to a handwritten signature.  Such a signature, based on a qualified certificate issued in one Member State, is to be recognised in other Member States.  However a mere "electronic signature" is not to be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in electronic form, or does not meet the requirements for a qualified electronic signature.  Moreover (other than in the case of qualified electronic signature) it is for the courts of each Member State to determine what legal effect an electronic signature has. 

Qualified electronic signatures have, in fact, rarely been encountered in English practice to date, and the Note relies largely on existing (but amended) English legislation and, in relation to the validity of e-signatures, on the English common law rather than on the eIDAS regulation.

In short, the Note suggests (it does not constitute legal advice) that an e-signature may satisfy English law requirements for certain contracts to be in "writing", for "signature" or for a document to be "under hand", and that an instrument executed by e-signature may be a deed, meaning that it is capable of meeting any requirement for attestation (witnessing) of that signature, and for delivery of the deed.  It concludes that the English courts will accept a document bearing an e-signature as prima facie evidence that the document is authentic, which is the same evidential weight as is given to a wet-ink signature – after all, even a wet-ink signature can be forged.  While the Note only addresses commercial contracts, its conclusions should in most cases also apply to consumer contracts.

To this welcome reassurance (and relative consensus among the legal community) we add three comments:

1.     First, there are still occasions when a wet-ink signature on a paper document is required.  In particular this is required by the Land Registry and, at least when stamp duty is payable on the document, by HMRC. 

2.    Second, while the Note provides strong support for the use of e-signatures under English law, bullet-proofing this against a possible challenge that there has been some irregularity may dictate that additional safeguards are taken (although the same point could be made about wet-ink signatures).  The effectiveness of e-signatures under other laws or when execution is by a foreign company may, however, still need to be checked under applicable law. 

3.    Third, and following from the last point, it is worth noting that a number of products have been launched offering e-signature solutions allowing signatures to be effected "remotely", for example by use of a mobile phone.  This could potentially solve many a last-minute panic when a crucial signatory is "travelling", and provide assurance about who has actually executed the document by generating a digital audit trail, although of course the Note does not endorse any particular provider or platform.


 

1 Note on the Execution of a Document Using an Electronic Signature issued by a joint working group of the Law Society Company Law Committee and the City of London Law Society Company Law and Financial Law Committees, and approved by Mark Hapgood QC

2 Regulation (EU) No 910/2014 having direct effect in EU Member States from 1 July 2016

 

 

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