The outbreak of COVID 19 has led to the recommendation that people should work from home if they are able. This has raised the question of whether the execution of documents by electronic signature is valid.
There are a couple of key issues to consider here; the type of document and how the electronic signature is made.
The Law Commission of England and Wales prepared a report into electronic signatures in 2019, where they identified the following forms of e-signing:
1. Typing your name into a contract or an email which contains contractual terms;
2. Pasting a scan / copy of your signature where indicated in a word or PDF form copy of the contract;
3. Clicking an "I accept" box where indicated;
4. Using an e-signing platform (such as DocuSign, AdobeSign etc.) to insert a typed or handwriting font version of your signature; and
5. Using an e-pen or finger to sign your name on a tablet / laptop trackpad.
E-signing is capable of being a legally valid method of executing documents (including deeds) under English and Welsh law, subject to any formalities that are required by law being satisfied and any relevant legislation, case law or contractual arrangements not specifying otherwise
There is some benefit in using e-signing platforms, as this creates a digital audit trail, time stamps it and records an IP address or any other identification steps taken to authenticate the signatory. This digital audit trail is admissible in evidence pursuant to the Electronic Communications Act 2000, section 7(1).
Provided there is offer and acceptance, consideration, certainty of terms and an intention to be legally bound, there is no need for a contract to take any specific form.
On the basis of the above, a contract may be executed by e-signing.
Whilst it may be simple to e-sign a contract, it may not be the case for documents which are to be entered into as a deed. Issues may arise when a deed needs to be validly executed.
1. Executing a deed
A document is validly executed as a deed by an individual if the deed is signed in the presence of a witness who attests the individual's signature or, in the event that the maker of the deed is incapable of signing personally due to a physical disability or illness, by the individual directing another person to sign the deed in his or her presence and in the presence of two witnesses who each attest the signature.
A document is validly executed as a deed by a company if it is executed by the company and delivered as a deed. Section 44 of the Companies Act 2006 sets out the methods in which any document, including deeds, are executed by a company. These include:
1. Affixing the company's common seal;
2. By the signature on behalf of the company by two authorised signatories; or
3.By the signature of one director of the company in the presence of a witness who attests the signature.
If therefore, an individual or a company is able to e-sign a document, how does an individual witness this signing to satisfy the formalities of executing a deed?
2. Witnessing an electronic signature
To witness a document, a person must record, on the document itself, that they have observed the execution of the document by the signatory. The Law Commission report states that it is their view that a witness must be in the presence of the signatory when the deed is signed, meaning physically in the same location. Therefore, it is not sufficient for the witness to witness the signing via video link.
For a deed to be validly witnessed electronically, a witness may electronically sign the attestation clause under the signature clause, using any form of electronic signature, so long as they are physically in the same location.
The need to be physically present when witnessing the signing of a deed can obviously cause issues for individuals in these times of social distancing and self-isolation. Whilst it is best practice for a witness to be entirely independent of the signatory, this, of course, may not be practical or achievable at the moment. Also, there is still the requirement for any witness to be physically present to witness the signing.
To be legally valid, a witness (to any document except for a will) must be:
1. over the age of 18;
2. not be a party to the deed; and
3. not have a personal interest in the provisions of the document.
Therefore, so long as the above are adhered to, a deed can be witnessed by someone in the same household. There is no prohibition on a signatory's spouse, co-habitee or civil partner from acting as a witness.
However, for companies, there may be an easier way. They may be able to execute a deed electronically by the signature of two authorised signatories, as there is no specific requirement for the signatures to be applied to the same signature page at the same time. This negates the need for a deed to be witnessed and attested. Should this be the case then it would be advisable to make sure that all parties to the deed are happy with these arrangements to avoid any future dispute about the validity of execution of the deed.
Whilst it is likely that some leeway may be given by parties to contracts or deeds in the current climate, it must be remembered that the underlying principles remain intact.
Therefore, when considering e-signing of documents you should think as to whether there is any bar e-signing and, if not, seek to agree protocols, procedures and methods of e-signing well in advance with other parties.
If you have any questions regarding signing, e-signing, or the validity of any signed documents then please contact the team at Greenaway Scott to discuss.
The information contained in this article is for information purposes only and is not intended to constitute legal advice. If you require further information, our corporate team would be more than happy to assist you. Please contact us at email@example.com or call us on 029 2009 5500 to speak to one of our team. Alternatively, please submit a quote through our website at https://www.greenawayscott.com/get-a-quote.