The Law Commission (the Commission) has confirmed that formal legal documents (including deeds) can be signed under English law using electronic signatures.
The Commission has acknowledged that “a lack of clarity in the law is discouraging businesses from executing documents electronically when it would be quicker and easier to do so”. It has therefore launched a formal consultation setting out its own findings and proposing further possible reforms. The Commission has also published a useful summary paper.
What does the Commission say?
The consultation paper covers all kinds of electronic signature, from scanned manuscript signatures to digital signatures, email sign-offs and e-signing platforms.
The key points arising from the consultation are as follows:
- In the Commission’s view, electronic signatures are a valid form of signature under English law, and there is no need for any further reform in this respect.
- In particular, an electronic document will be “in writing” for legal purposes if it can be viewed in a legible form on a screen.
- Importantly, the Commission has confirmed that deeds can exist and be executed electronically.
- The paper reminds readers that, according to case law, a name typed into an email will normally be regarded as a signature, but a name that is automatically inserted into an email with no positive action by the sender will not.
- In the Commission’s view, it is not currently possible for a person to witness someone else’s signature unless both persons are physically together in the same location. However, the Commission has proposed changing the law to allow “remote witnessing” via live video link.
- The Commission is also seeking views on whether to replace witnessing for electronic signings entirely with (for example) digital signatures using public key infrastructure (PKI) or a new system under which a witness could rely on an “acknowledgement” by the signatory that he or she executed the document electronically.
- The Commission recommends establishing an industry working group to consider what practical and technical issues are currently inhibiting the use of electronic signatures. This would cover the security and reliability of electronic signatures and inter-operability between e-signing platforms.
- Finally, the Commission has recommended initiating a wider review on whether there is still a place for the concept of deeds in English law in the 21st century.
The paper does not cover wills or dispositions of real estate, and it covers only documents executed under English law. At this stage, the Commission is simply canvassing views on its proposals, rather than making formal recommendations for legislative reform.
The Commission has asked for comments on the consultation by 23 November 2018.
The consultation is timely. There is a clear desire by many commercial counterparties to use electronic signatures to introduce flexibility when signing documents and to generate cost savings by avoiding physical meetings.
The Law Society and CLLS have previously confirmed that electronic signatures are valid for commercial contracts, and various law firms (including Macfarlanes) now offer the ability to sign documents electronically. However, the take-up on large, commercial transactions has been relatively low to date.
The Commission’s conclusions will hopefully go some way to assuaging these concerns and promoting the use of electronic signatures.