Execution of a document using an electronic signature

Execution of a document using an electronic signature

On 25 July the Law Society issued guidance on the use of electronic signatures (or e-signatures). Prepared by a joint working party of the Law Society, the City of London Law Society and leading City law firms, and reviewed and approved by leading counsel Mark Hapgood QC (together the “JWP”), the practice note (as noted in its accompanying press release) aims to help solicitors to make “greater and more confident use of technology in their day-to-day work” by providing “greater certainty when using electronic signatures on commercial contracts”.

Whilst the Electronic Communications Act 2000 (ECA 2000) provides a statutory framework for the admissibility of electronic signatures in England and Wales, it does not assist in determining whether a document signed with an e-signature has been validly executed.  The JWP has therefore considered the wider principles of English common law to draw conclusions, set out in the note, about the validity of electronic signatures. In general, the guidance supports the validity of electronic signatures for both simple contracts and deeds.  Some key points to note are that, in the opinion of the JWP:

  • E-signatures can be used on contracts which are subject to an existing statutory provision imposing execution formalities, even where a specific modification by statutory instrument (under the ERA 2000) has not yet been applied to that provision;
  • A contract executed using an electronic signature (and which may exist solely in electronic form) satisfies a statutory requirement to be in writing and/or signed and/or under hand;
  • A deed can be validly executed by a company:
    - by each of two directors signing the deed (using an electronic signature or another acceptable method) either in counterpart or by one director signing, followed by the other adding his or her signature to the same version (electronic or hard copy) of the deed; or
    - by a director e-signing with another individual genuinely observing such signature and that witness subsequently signing an adjacent attestation clause (it is noted that best practice would be for the witness to be physically present, rather than witnessing through video conferencing or other live televisual medium);
  • An individual can validly execute a deed by e-signing under the “genuine observation” of a witness in the same way as described above for a director; 
  • Delivery of a deed can be achieved through e-signing, however, as with wet-ink signatures, parties should explicitly address when delivery takes place if it is not intended to be at the time of signature;
  • Board minutes and written resolutions can be validly e-signed if they are subsequently:
    - sent or supplied in hard copy form by or on behalf of the person who signed it, or
    - sent or supplied in electronic form, provided that the identity of the sender is confirmed in a manner specified by the company or (where no such manner has been specified by the company) if the communication contains or is accompanied by a statement of the identity of the sender and the company has no reason to doubt the truth of that statement; and 
  • There is no reason why a document cannot be signed using a combination of e-signatures and wet-ink signatures.

It should be noted that some authorities or registries (eg. the Land Registry) still require a wet-ink signature on certain documents.

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