Electronic execution of documents

Current project status

• Initiation: Could include discussing scope and terms of reference with lead Government Department
• Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
• Consultation: Likely to include consultation events and paper, making provisional proposals for comment
• Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
• Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations

Making it easier to execute documents electronically. This project is now complete. The Government responded to our report in March 2020, confirming its agreement with our legal conclusions and undertaking to establish an Industry Working Group to consider issues of security and technology. The full response is available below.

Download the Electronic Execution of Documents report.

Download the summary paper.

Download the Welsh summary of the paper.

The problem

The law relating to signatures and other formal documentary requirements has a history spanning centuries.

In today’s world, individuals, consumers and businesses demand modern, convenient methods for entering into binding transactions. Technological developments have changed the ways in which these transactions are made.

Can the law of England and Wales keep up?

Our common law system is flexible and contracts can be created in many ways. Most transactions are not required to be executed in a particular manner. Electronic signatures are validly used instead of handwritten signatures in transactions every day.

However, the law subjects, particular types of documents to certain procedures, such as signing or witnessing.

We have been told that issues around the electronic execution of documents, including uncertainty around the legal status of electronic signatures, are inhibiting the use of new technology where legislation requires a document to be “signed” or executed as a deed.

The project

This project came out of our 13th Programme of Law Reform and started in January 2018.

The purpose of the project is to address any uncertainty as to the formalities around the electronic execution of documents.  And to ensure that the law governing these formalities is sufficiently certain and flexible to remain competitive in a post-Brexit environment.

The project 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”; and
2. the electronic execution of deeds, including the requirements of witnessing and attestation and delivery.

This project is linked to our planned project on Smart Contracts.

Our report was published on 4 September 2019.

Our report addresses the use of electronic documents by commercial parties and consumers, including trust deeds and lasting powers of attorney (LPAs). However, it does not extend to wills, nor to registered dispositions under the Land Registration Act 2002, which are explicitly excluded from the scope of our project. Wills are the subject of another Law Commission project, which you can read about here.

Legal validity of electronic signatures

The following statement of the law sets out our high-level conclusions as to the law regarding the validity of electronic signatures. It applies both where there is a statutory requirement for a signature and where there is not. Because of the way the law has developed, our summary of the law also has broad application and is not restricted to commercial and consumer documents.

Our report sets out a more detailed analysis of the law relating to electronic signatures.

Statement of the law: execution with an electronic signature

1. An electronic signature is capable in law of being used to execute a document (including a deed) provided that (i) the person signing the document intends to authenticate the document and (ii) any formalities relating to execution of that document are satisfied.
2. Such formalities may be required under a statute or statutory instrument, or may be laid down in a contract or other private law instrument under which a document is to be executed. The following are examples of formalities that might be required: (i) that the signature be witnessed; or (ii) that the signature be in a specified form (such as being handwritten).
3. An electronic signature is admissible in evidence in legal proceedings. It is admissible, for example, to prove or disprove the identity of a signatory and/or the signatory’s intention to authenticate the document.
4. Save where the contrary is provided for in relevant legislation or contractual arrangements, or where case law specific to the document in question leads to a contrary conclusion, the common law adopts a pragmatic approach and does not prescribe any particular form or type of signature. In determining whether the method of signature adopted demonstrates an authenticating intention the courts adopt an objective approach considering all of the surrounding circumstances.
5. The Courts have, for example, held that the following non-electronic forms amount to valid signatures:
   • signing with an ‘X;
   • signing with initials only;
   • using a stamp of a handwritten signature;
   • printing of a name;
   • signing with a mark, even where the party executing the mark can write; and
   • a description of the signatory if sufficiently unambiguous, such as “Your loving mother” or “Servant to Mr Sperling”.
6. Electronic equivalents of these non-electronic forms of signature are likely to be recognised by a court as legally valid. There is no reason in principle to think otherwise.
7. The courts have, for example, held that the following electronic forms amount to valid signatures in the case of statutory obligations to provide a signature where the statute is silent as to whether an electronic signature is acceptable:
   • a name typed at the bottom of an email;
   • clicking an “I accept” tick box on a website; and
   • the header of a SWIFT message.
8. With specific regard to deeds and the witnessing requirements thereof, a deed must be signed in the physical presence of a witness who attests the signature. This is the case even where both the person executing the deed and the witness are executing / attesting the document using an electronic signature.

Our recommendations and options for reform

In our report we made the following recommendations and options for reform to Government:

Recommendations:

• An industry working group with multi-disciplinary membership should be convened by Government to consider practical issues relating to the electronic execution of documents. It should also provide best practice guidance for the use of electronic signatures in different commercial transactions as well as where individuals, particularly vulnerable individuals, execute documents electronically.
• The industry working group should consider potential solutions to the practical and technical obstacles to video witnessing of electronic signatures on deeds and attestation. Following the work of the industry working group, the Government should consider legislative reform to allow for video witnessing.
• A future review of the law of deeds should consider broad issues about the efficacy of deeds and whether the concept remains fit for purpose, as well as specific issues which have been raised by consultees in relation to witnessing, delivery and the decision in Mercury. Such a review should take a holistic approach, and deal with both deeds executed on paper and electronically.

Options for reform:

• Although the current law already provides for electronic signatures, Government may wish to consider codifying the law on electronic signatures in order to improve the accessibility of the law.

Contact

By email to: commercialandcommon@lawcommission.gov.uk