Electronic signatures are valid, says Law Commission

The Law Commission 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 ones. However, in respect of deeds, which require signatures to be witnessed, the Commission expressed the view that remote witnessing by video is probably not sufficient under current law. This means that further reform may be needed in order for e-signatures to be embraced as standard in the property industry, as most documents intended to create or transfer a legal estate or interest in land must be made by deed, under section 52 of the Law of Property Act 1925. In a new report on e-signatures, the Commission has sought to set out a simple statement of the law to end uncertainty and increase confidence in the use of the technology. Commercial and common law commissioner Stephen Lewis said: “Electronic signatures can offer quicker and easier transactions for businesses and consumers. Our report aims to provide an accessible statement of the law which makes it clear that an electronic signature can generally be used in place of a handwritten signature as long as the usual rules on signatures are met.” The Commission says that an electronic signature is capable in law of being used to execute a document (including a deed), provided that the signatory intends to authenticate the document and that any relevant formalities, such as the signature being witnessed, are satisfied. It adds that this view is based on legislation and court decisions which relate to both non-electronic and electronic signatures. It explains that the common law in England and Wales has always been “flexible” in recognising a range of types of signature, including signing with an X, initials only, a printed name, or even a description of the signatory such as “Your loving mother”.  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. The Commission’s report acknowledges a number of concerns about electronic signatures, including the fear that they are more susceptible to fraud than handwritten signatures, which could put vulnerable people at risk, and 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. In respect of deeds, which require signatures to be witnessed, it expressed the view that the current law probably does not allow for “remote” witnessing, such as by video link. While the report confirms that the current law already provides for electronic signatures, the Commission has set out an option for reform, codifying the law on electronic signatures, that the government may wish to consider. It has made recommendations to address some of the practicalities of electronic execution and the rules for executing deeds, including: 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. A future review of the law of deeds – to consider broad issues about the effectiveness of deeds, whether the concept remains fit for purpose and specific issues which have been raised by stakeholders. The review should include deeds executed both on paper and electronically. Click here to view the full report and a summary. To send feedback, e-mail jess.harrold@egi.co.uk or tweet @estatesgazette Photo: APA Picturedesk Gmbh/Shutterstock