E-signatures - Is the law finally catching up?

The validity of electronic signatures has been addressed in a recent Law Commission report

Executive summary

In an increasingly paperless world, the law needs to address the validity of electronic signatures.

We are all seeking to work more efficiently and sustainably and the Law Commission’s report on the “Electronic Execution of Documents” in England and Wales should help achieve this.

In detail

The report, published on 4 September 2019, states that an electronic signature is capable in law of being used to execute a document (including a deed) provided that:

  • The person signing the document intends to authenticate the document; and
  • Any legal formalities relating to execution of that document are satisfied.

English common law has never prescribed any particular form for a signature to be valid, only that the person signing the document must have done so with the intention of authenticating it. The same principle applies to an electronic signature, which broadly covers everything from a scanned wet-ink signature to a typed name.

Issues as to the reliability of a document which has been executed electronically will no doubt arise. How can one know that the document has in fact been signed by the intended signatory? Parties executing documents should ensure there is evidence to address any concerns raised at a later stage, such as a clear (electronic) paper trail or a witness.   

Another area of concern relates to the e-signature of deeds. A deed must be signed in the physical presence of a witness who must attest the signature, regardless of whether the document is being executed using an e-signature. Witnessing a signature via video link, for example, is not sufficient.

The Law Commission’s report didn’t consider the execution of wills, or of documents in land transactions requiring registration under the Land Registration Act 2002, in respect of which a separate project is currently underway.

However, with fortuitous timing, the issue of electronic signatures in land transactions was considered last month by the County Court in the case of Neocleous v Rees, in which it was held that a solicitor’s automatic email sign-off was sufficient to create a legally binding contract.

In that case, a solicitor sent an email confirming terms of a settlement which involved his client selling land to a neighbour with whom he was in dispute about access rights.  The email was signed off with “Many thanks” and an automatically inserted email signature (comprising the solicitor’s name, position and contact details). The other party’s solicitor replied, confirming the agreement.

It was argued that the e-mail exchange did not create a binding contract because there because the emails were not signed by the parties. However, the Court held that the two emails amounted to a single document, signed by the parties’ solicitors on their behalf by way of their automatic signatures. The presence of the sender’s name indicated “a clear intention to associate oneself with the email – to authenticate it or to sign it”. Further, the use of “Many thanks” showed an intention to connect the name with the content of the email.

Conclusion

Therefore, when using e-mail, caution should be taken to ensure a binding contract is not entered into inadvertently. Where appropriate, correspondence should be sent on a “subject to contract” basis.

If you have any questions or would like to know more about our update, please contact Peter Hall, Principal Associate, on 0161 214 0659, or peter.hall@weightmans.com.  

Share on Twitter