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The Law Commission consults on - and provisionally confirms - e-signature validity

Posted on 23 August 2018 by Kate Higgins

The Law Commission consults on - and provisionally confirms - e-signature validity

In our daily lives, both business and personal, we often find ourselves contracting electronically: purchasing goods on the internet, or e-signing flat rental agreements or simple business agreements with a finger print on a screen or by clicking "I accept".  Yet we are still presented with a pen and paper for more formal documents.  Lawyers and others ask for our so-called "wet ink" signature - even if subsequently scanned - in spite of the availability of ever-more sophisticated e-signing technology.  Why is this?  Haven't the law - and lawyers - already caught up with modern technology, or is there still more to be done?

The Law Commission has considered and given provisional conclusions and proposals on this issue in their consultation on electronic execution published this week.  The results are not surprising, or indeed revolutionary, but they are welcome.  They provide some provisional reassurance that the law has, for the most part, already caught up - no doubt a relief to those who have already gone some way to adopting e-signing technology.  However there are helpful suggestions as to how further reform and industry guidance could result in greater adoption of e-signatures.  The consultation is part of the Commission's "13th programme of Law Reform", which also includes a review of smart contracts, automated vehicles, intermediated securities and trust law with the aim to "boost Global Britain and help enhance the UK’s competitiveness as we leave the EU".

Here are some key points:

  • What is an electronic signature?  There are many different types and the consultation helpfully takes us through various definitions and law.  Practically, an electronic signature might be as simple as a typing a name in an email or applying a pre-scanned signature to a document.  It may involve logging into a platform to access a document and apply a computer generated "signature" or using touch screen technology to sign with a finger or stylus.  It may even involve "public key infrastructure" with or without "independent certification".  These may carry varying levels of evidential weight/security, but the key point is that they must involve some level of intent by the signatory to "authenticate" the document to qualify as an electronic signature at law.
  • Validity of electronic signatures – the consultation provisionally concludes that an electronic signature is already capable of satisfying a statutory requirement for a signature.  This is an area where there have previously been differing views.  If confirmed in the final report, the Commission's view should go some way to address existing lack of confidence in some parts of the legal community concerning the validity of electronic signatures for those documents where particular formalities are required - such as contracts for the sale of land, deeds and powers of attorney. 
  • Addressing requirements for witnessing – here again, the consultation is helpful in concluding that, where a witness is required, the witness may attest electronically.  However, it expresses the provisional view that under current law, the witness must be "present" in the same physical place to see the signatory apply their e-signature.  This is particularly important for deeds signed by individuals or where a director/member executes on behalf of a corporate entity.  This may disappoint some who would argue that "present" could include "virtual presence".  Nevertheless, the consultation goes on to suggest a number of proposals for reforming the law here.  They include: (1) allowing witnessing by video link; (2) allowing the witness and signatory to access the same e-signing platform, but with no video or other direct communication between them; and (3) allowing the witness not to be "present" at signing at all, but have the signatory "acknowledge" the signature to the witness who then attests the acknowledgement.
  • An industry working group?  The Commission proposes that a government co-ordinated industry working group of lawyers, technology experts, insurers and businesses should be set up to provide guidance and best practice on the practical issues around electronic execution of documents.  This is key.  As pointed out in the consultation (and in our experience), there are a number of non-legal technical issues which are currently inhibiting take up of electronic signing.  These include issues relating to security and reliability, trust and identity, the interoperability of e-signing systems, and the archiving of information.
  • Scope of the project:  The consultation excludes the making of wills, which are subject to a separate Law Commission project and require distinct formalities from deeds, and dispositions of registered land, which are subject to a separate HM Land Registry electronic registration project.  The Commission has also concluded that it should leave it to certain other bodies and the legislator to address particular concerns relating to public protection.  For example, lasting powers of attorney are currently subject to additional requirements on execution and are still required to be executed in hard copy before being registered with the Office of the Public Guardian.  Some other authorities also still require wet ink signatures for registrations.  The project is also limited in scope to the law of England and Wales.  There is helpful analysis of the law of other jurisdictions where e-signatures are permitted to a greater or lesser degree, including in Scotland.  Interestingly, Estonians are issued with identification cards which are used for electronic authentication and to create a secure form of signature known as a "qualified electronic signature", which under EU law has equivalent effect to a handwritten signature. 

This consultation is part "Law of today", part "Law of tomorrow". In it the Commission appears to be taking a light touch approach, proposing legislative intervention only where necessary.  By giving a view that e-signatures are already valid for most purposes, based on our common law, they both confirm validity of use of technological advances already in use and allow for future agility in the law.  Arguably, some of the reform proposals could have been a little more revolutionary.  However, formation of the industry working group could be particularly beneficial in encouraging take up of e-signing technology.  Responses are requested by 23 November 2018. 

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