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E-signatures: Are times changing?

Technology is moving forward fast with developments aiming to simplify and digitise everyday tasks and the use of electronic signatures is already prevalent in daily life, from signing for your food shop on a digital device, to clicking the ‘I accept’ button online.

However, when it comes to signing important legal documents, there is little clarity or confidence in the use of electronic systems.

Types of e-signatures

Articles 25(2) and (3) of the EU Regulation for Electronic Identification and Trust Services (eIDAS) looks at e-signatures in a commercial context, stating three different types of e-signatures:

  • Simple e-signatures have the least amount of security but are also the most common. For example, simply typing your name at the bottom of an email is considered a simple electronic signature.
  • Advanced e-signatures (AES) use a web-based platform (which must be compliant with the requirements of eIDAS) that links directly and uniquely to the signatory. A secure key allows only the intended signatory access to sign the document and the resulting signature is capable of identifying the signatory.
  • Qualified e-signatures (QES) are the most secure and confidential e-signatures. As with an AES, a QES is created via a web-based platform, however the platform must be operated by a Trust Service Provider (TSP), an independent body which has been granted qualified status by the Information Commissioner’s office (ICO). Only QESs are recognised as having the same legal value and admissibility as the classic handwritten signature within the EU.

Can legal documents be signed electronically?

Law Society guidance suggest that e-signatures are acceptable for contracts which have a statutory requirement to be ‘in writing’, ‘signed’ or ‘under hand’, because they take the view that the use of e-signatures is simply a different form of carrying out the same requirement.

However, in order for certain contracts to be valid and binding, they must be in the form of a deed – a written document which is signed in the presence of an independent witness, who must also sign the document and insert their full name and address. At present there is no legislation that specifically states that the e-signature of a deed is acceptable and, to date, there is little case law to indicate what view the Courts will take when it comes to enforcing deeds which have been signed electronically.

Yet Law Society guidance confirms that the signing of a deed is merely ‘making a mark,’ and suggests that, provided a witness physically sees that mark being made, whether electronically or not, it should be acceptable.

Despite this there is still little certainty or confidence in the use of e-signatures in the execution of deeds. This is highlighted by the introduction of an additional section to the HM Land Registry Practice Guide in February 2017, which stated an electronically signed document can’t be classed as a deed without a statutory provision confirming it to be.

For the time being therefore, the Land Registry will not accept deeds signed in an electronic form.

There is still work to do

In addressing the uncertainty in the use of e-signatures in executing deeds, the Law Commission are currently 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
  • The formalities requiring a physical witness can be replaced by:
  • The use of webcam or video links
  • Web platforms that enable both a signatory and witness to be logged onto the same programme from different locations and/or
  • Witnesses using a click system to acknowledge that they have witnessed an e-signature being applied
  • The concept of deeds are still fit for the 21st century

Whilst there is no doubt that the use of e-signatures would be revolutionary for businesses and individuals alike, speeding up everyday transactions and injecting convenience into legal formalities, there is still work to be done to ensure appropriate procedures and security are in place.

What are your thoughts? Would you trust a world where all signatures are electronic or will the classic pen and paper prevail?

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Alex Hall

Legal Executive
Corporate & Commercial
AHall@LawBlacks.com
0113 227 9239
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Alex Hall Blacks Solicitors LLP