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Are electronic signatures legally binding?

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In light of the recent Law Commission paper regarding ‘Electronic Signatures’, Robert Orkney, trainee solicitor, with Harrison Drury, considers what this may potentially mean for electronic execution and validation of documents.

What is the validity of an electronic signature?

The first consideration the commission addressed was the validity of electronic signatures. After careful deliberation following its analysis of the law, the commission has reached a provisional conclusion that an electronic signature is capable of meeting a statutory requirement for a signature without the need for any legislative reform.

However, despite the above clarification, it appears the commission has fallen short of assessing whether an electronic signature will meet the statutory requirement for legal purposes, as well as the reliability and evidential weight that such a signature may have upon the execution of documents.

What ‘in writing’ actually encompasses

With regards to the affects that this will have upon land contracts, Section 2 of the Law Property (Miscellaneous Provisions) Act 1989 states that a contract for the sale or other disposition of an interest in land can only be made ‘in writing’. As recent cases have confirmed, this does appear to make it possible that electronic documents – in general – will satisfy a statutory requirement for writing. The key factor that the Law Commission has cited with regards to the electronic signing of a contract is “whether the method of signature used fulfilled the function of demonstrating an intention to authenticate the document”.

With regards to the execution of deeds, the usual formalities of witnessing and attestation will be retained and no reform is proposed as this requirement of delivery still fulfils a useful function. With particular regard to electronic signatures, the Law Commission has stated that “it is logical that the requirement for witnessing may be satisfied by the witness watching the signatory apply his or her electronic signature in the same location”. They are cautious, however, in their outright confidence of such an act stating that “we are not persuaded that parties could be confident that the current law would allow for the witness viewing the signing on a screen, without being physically present”.

The challenge to keep up with digital technology

From a legal and client point of view, it is timely that the law is continuing to keep pace with a more modern approach to commercial transacting. However, it is important to highlight that where the use of electronic signatures is performed, there are some key points to consider. Reliability and an intention to fulfil its intended purpose will go a long way towards satisfying the authentication of a document. Secondly, it must be for both parties to be satisfied that they hold a contract or document “signed” by the client. What form the signature takes may prove to be the deciding factor in making this decision, with the Law Commission even suggesting that a copy and pasted or scanned signature, or even a typed name will suffice.

To further alleviate the uncertainty in the law and improve the speed of business transactions, the commission has also laid out additional plans that could further boost business development. These plans particularly help to support dealing with transactions outside the UK and to help capitalise on new technologies including:

  • Electronic signatures witnessed via a webcam or video link.
  • Electronic execution of deeds, using a real-time, shared online platform to witness documents.

 

As always, ensuring that you receive specific legal advice is crucial. The commercial team at Harrison Drury will be happy to assist. For more information contact Robert on 01772 258 321.


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