Electronic signatures are valid say Government’s legal experts

Electronic signatures can be used to sign formal legal contracts under English law, the Law Commission has confirmed.

The Government’s independent legal experts have today published early conclusions which aim to sweep away the current uncertainty in the law, allowing businesses to speed up transactions by going fully digital.

The Commission has also laid out possible steps which could further boost business and help the UK capitalise on new technologies, proposing:

  • that electronic signatures could be witnessed via a webcam or video link
  • the formation of a Government-backed industry working group to consider the on-going practical issues around the use of electronic signatures and how these can be improved

Alongside that they ask whether the law should go even further to facilitate the electronic execution of deeds, by allowing a witness to use a real-time, shared online platform to witness documents from different locations.

Law Commissioner Stephen Lewis said:

“Contract law in the UK is flexible, but some businesses are still unsure if electronic signatures would satisfy legal requirements.

“We can confirm that they do, potentially paving the way for much quicker transactions for businesses and consumers.

“And not only that, there’s scope, with our proposals for webcam witnesses, to do even more to make signing formal documents more convenient, speed up transactions and get business booming.”

Uncertainty in the law causing problems

Not all transactions have to comply with formal requirements. But as far back as 1677, the Statute of Frauds required certain documents to be in writing and signed. It is still in force today but the world has moved on.  Many expect transactions to be instant and often digital, regardless of the type of transaction.

The EU-wide eIDAS regulation says that an electronic signature cannot be denied legal validity simply because it is electronic and that that electronic signatures are admissible in evidence in legal proceedings.

But while the Electronic Communications Act 2000, a UK statute, mirrors the admissibility provision in eIDAS, it does not expressly provide for the validity of electronic signatures.

This lack of clarity in the law is discouraging businesses from executing documents electronically when it would be quicker and easier to do so.

This may disproportionately affect small businesses and start-ups, which do not have access to legal expertise in the same way as larger commercial businesses.

Bringing surety and capitalising on technology

So in plans published today, the Law Commission has moved to end that uncertainty by setting out their view that electronic signatures are valid and will generally meet the statutory requirements where there is an intention to authenticate the document.

And in further steps to improve the law, the Law Commission is seeking views on whether:

  • the government should set up a group of industry experts to monitor the use of electronic signatures and advise on potential changes which could help businesses as new technology emerges
  • webcam or video links could be used instead of a physical witness for documents which require witnessed signatures
  • there should be a move away from traditional witnessing in person to:
    • a signing platform alone, where the signatory and witness are logged onto the same programme from different locations; or
    • the ability of a person to “acknowledge” that they applied an electronic signature to a witness after the event
  • there should be a further project on whether the concept of deeds is fit for purpose in the 21st century

Further information

The Law Commission is a non-political independent body, set up by Parliament in 1965 to keep all the law of England and Wales under review, and to recommend reform where it is needed. Since then more than two-thirds of all reports have been accepted or implemented in whole or in part.

The Electronic Execution of Documents consultation will be published at 00:01 21 August 2017 at: https://lawcom.gov.uk/project/electronic-execution-of-documents/.

The deadline for responses is 23 November 2018.

This work came out of the Law Commission’s 13th Programme of Law Reform and complements work on smart contracts which is also currently ongoing.  The work focuses on two aspects of the electronic execution of documents:

  1. The use of electronic signatures to execute documents where there is a statutory requirement that a document must be “signed”.
  2. The electronic execution of deeds, including the requirements of witnessing and attestation and delivery.

 

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