The Law Commission has issued its report on its study about electronic signatures, following a consultation in 2018. It has confirmed that electronic signatures can be used to execute documents, including where there is a statutory requirement for a signature. This means that, in most cases, electronic signatures can be used as a viable alternative to handwritten signatures.
Businesses and individuals use electronic signatures on contracts every day. However, despite this, the Law Commission has found that some parties still have doubts over whether an electronic signature can be used in particular situations. The Law Commission has set out a simple statement of the law to end that uncertainty and increase confidence in the use of this technology.
The report is the culmination of a project which was part of its 13th Programme of Law Reform and started in January 2018. The purpose of the project was to address any uncertainty regarding the formalities around the electronic execution of documents. In addition, it was to ensure that the law governing these formalities is sufficiently certain and flexible to remain competitive in a post-Brexit environment. The report notes that the Law Commission has reviewed the topic before, most recently in 2001, and that the time was right to revisit it. This is because there is currently increased focus on the electronic execution of transactions because of interest in the use of blockchain and automated “smart” contracts to enter into legally binding transactions.
The validity of electronic signatures
The Law Commission states that an electronic signature is capable in law of being used to execute a document (including a deed), as long as the signatory intends to authenticate the document and that any relevant formalities, such as the signature being witnessed, are satisfied. The Law Commission has based its view on legislation and court decisions on both non-electronic and electronic signatures.
The common law in England and Wales has always been flexible in recognising a range of types of signature. The courts have considered electronic signatures on a number of occasions and have accepted electronic forms of signatures including a name typed at the bottom of an email or clicking an “I accept” tick box on a website. These court decisions supplement the EU eIDAS regulation (EU/910/2014), which states that an electronic signature cannot be denied legal validity simply because it is electronic.
Practicalities of electronic execution
In addition to stakeholder doubts about the legal validity of electronic signatures, the Law Commission has identified some practical considerations which can have an impact on the decision to execute documents electronically, including:
- Concerns that electronic signatures are more susceptible to fraud than handwritten signatures, which could put vulnerable people at risk
- Practical issues such as the reliability and security of e-signature technology and the cross-border nature of some transactions which can affect whether parties opt to use electronic or handwritten signatures
- Whether deeds can be witnessed remotely via video witnessing. Where a signature has to be witnessed, the Commission’s view is that the current law probably does not allow for “remote” witnessing such as by video link.
The Commission’s recommendations and options for reform
The Law Commission has made recommendations to address some of the practicalities of electronic execution and the rules for executing deeds. The recommendations include:
- The creation of an 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
- Video witnessing for deeds – the industry working group should look at solutions to the practical and technical obstacles that exist to video witnessing. Following this work, the UK government should consider appropriate legislative reform
- A future review of the law of deeds – to consider broad issues about the effectiveness of deeds and whether the concept remains fit for purpose and specific issues which have been raised by stakeholders. The review should include deeds executed on paper and electronically.
The report confirms that the current law already provides for electronic signatures. However, the UK government may wish to consider codifying the law on electronic signatures to improve the accessibility of the law.
