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Insight

Electronic signatures – are they valid?

Locations

United Kingdom

Businesses and individuals already sign millions of contracts electronically every day, from signing for doorstep deliveries to multi-million pound currency deals. However, there is lingering doubt over whether an electronic signature can be used in particular situations.

Law Commission Report

The Law Commission published a report on electronic signatures last year, which can be found here. Overall, the report states that a contract (including a deed) can be validly executed by electronic signature provided that it can be shown that the person signing intended to do so and any required formalities are satisfied, such as signing in the presence of a witness.

The Law

The governing legislation across all EU Member States in respect of electronic signatures is 'EU Regulation 910/2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC' ("eIDAS"). Since eIDAS is an EU 'regulation' it required no legislation at a national level and came into force on 1 July 2016 in all Member States. The UK has passed the 'Electronic Identification and Trust Services for Electronic Transactions Regulations 2016' ("UK Regulation") which came into force on 22 July 2016 and repealed the Electronic Signature Regulations 2002 and amended relevant sections of the Electronic Communications Act 2000 (ECA 2000) which dealt with electronic signatures under the previous regime.
There are several types of electronic signature. They can vary from a simple "I accept" button, to those, which require several layers of proof of identification and authentication. Depending on the contract in question (some contracts require a specific form of electronic signature), all may be valid under English law, but naturally those with the highest levels of authentication will carry the highest level of evidential weight.

Issues

One issue, which remains unresolved, is execution of deeds, which require a witness' counter signature. Proponents of electronic signatures would like to see the use of "remote witnessing", for example over video links but the Law Commission report states 'our view is that the requirement under the current law is that a deed which must be signed "in the presence of a witness" requires the physical presence of that witness.' The report recommends establishing a 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.

Brexit also impacts on the regulation of electronic signatures. Depending on the deal/no deal scenario, eIDAS may no longer apply although this is unlikely to have a significant effect on the use of electronic signatures in the UK as electronic signatures are recognised under the Electronic Communications Act 2000 and would still be admissible as evidence to determine the authenticity and integrity of an electronic document.

What is clear is the direction of travel.  Electronic signatures will become the new normal and we expect to see more and more businesses embracing this technology.