With a large proportion of the global workforce now working from home, many people will not be able to sign documents in person nor will they have access to an industrial-sized fast printer (or any printer at all) or the ability to scan long documents. So how can you make sure that you, and counterparties to your agreements, are signing them properly? How can you ensure that the extra requirements of courts and registries are fulfilled?
Practice is developing fast in this area, with new technology gaining ground, changing attitudes towards adopting e-signing platforms and some movement towards some public bodies, such as the stamp office, accepting filings in different ways.
Here's our practical guide for e-signing legal documents.
Is a signature always needed for contracts?
English law is fairly flexible in terms of the circumstances in which a legally binding contract has been created. It doesn't need the word "contract" at the top of the page, and it doesn't even need to be in writing. However, in order for both parties to:
- ensure that all the terms agreed are set out clearly and are properly incorporated into the contract; and
- have confidence that they can rely on and enforce the terms in the event of any disputes,
a formal written contract signed by both parties is still the best way to proceed.
What is an electronic signature?
The law does not prescribe a type of electronic signature, but common law in England adopts a pragmatic approach as to what will satisfy a signature requirement. For example, the courts have held in respect of non-electronic forms of signatures that simply signing with an "X" constitutes a valid signature. The courts have also ruled that a name typed at the bottom of an email, a scanned signature or clicking "I accept" on a website are all valid signatures. In each case the key question is whether, in undertaking these steps, the person 'intends to authenticate' (i.e give validity to) the document. Furthermore, the Law Commission confirmed last year that electronic signatures are valid.
To avoid disputes later down the line, the best way to demonstrate this intention to authenticate is still to circulate a formal contract for both parties to sign it, and for it to be dated by agreement once both parties have exchanged their signed versions. However, the act of signing can be made much easier by using electronic signing platform – so parties do not have to deliver a wet ink signature or print, sign and scan. There are plenty of providers available, such as AdobeSign, HelloSign and, the platform our Firm uses the most, DocuSign. You can send your documents via an e-signing platform, and the signatories can sign it with their finger or mouse using their computer, tablet, or phone screen.
Does it work for deeds?
There has been some debate in recent years about whether using an electronic signature to execute a deed constitutes a legally executed deed, not to mention the logistical difficulties of ensuring the requirement to have a witness and that the deed be attested are fulfilled. As mentioned above, the Law Commission, in a report last year, confirmed that an electronic signature can be valid for deeds. This was a step forward in getting the legal profession and banking institutions comfortable with electronic signing for deeds, however, in the absence of statute or case law, some stakeholders have remained reluctant to accept electronically signed deeds. In the current circumstances, we are starting to see signs that this attitude will become more relaxed.
Can document witnessing be done via video-link?
No. One of the questions we are most often asked is whether a person can witness a signature using technology. Although the Law Commission suggested that this should be looked at further, their position was that even when the signatory signs electronically, and the witness signs and completes their details electronically, the witness should be physically present when the signatory signs the document. Without emergency legislation, this is not something that we see changing quickly, even amid the current circumstances in which social distancing will make witnessing much more difficult. The best you can do is ensure your witness stands two metres away and, where you are using the same electronic device to sign and witness, make sure you both wash your hands and clean the device afterwards. Normally, the witness should not be a relative for evidential reasons, but these are not normal times and so we are starting to see some acceptance that the witness could be an adult family member provided they are not also a party to the document. It is also important to check what witnessing functionality the e-signing platform being used has and the most practical way to arrange for witnessing. There are a number of different routes, depending on the provider and version of their technology.
What about documents for court proceedings and processes?
In the case of most documents relating to legal proceedings, electronic signatures such as a PDF, or even a photograph, of a printed and 'wet ink' signed execution page will be sufficient. It is also possible to sign using an electronic signing platform, where it is sent by a law firm or other person with an account with a platform provider (such as those referred to above). In some circumstances it may also be possible for a party's lawyer to certify a document (such as a witness statement) as being approved by that individual.
However, in the case of documents which require some form of witnessing before a lawyer, notary or commissioner for oaths (such as statutory declarations or affidavits), real difficulties will arise where it is not practical or possible to physically meet with the relevant professional in person. As seen above, it is not currently thought that this can be done using video conferencing.
Some protections have been implemented in relation to Statutory Declarations given in relation to insolvency proceedings to prevent challenges solely on the basis that they have been made remotely. However, these protections are temporary and limited. It is hoped that the Government will clarify the law in this area in response to the current circumstances. However, in the meantime careful advance thought and planning will need to be given to the execution of these documents.
Can I sign a share transfer electronically?
Provided there is no restriction in the company's articles, a share transfer can usually be in electronic form and may be signed electronically. However, prior to the UK lock down, HMRC required paper transfers bearing a wet ink signature to be lodged with them for 'stamping' with duty paid. This requirement has now been temporarily relaxed. HMRC has confirmed that it "will accept e-signatures while coronavirus (COVID-19) measures are in place". The form is to be emailed to HMRC and payment made electronically. See the HMRC guidance on stock transfers and stamping.
When should I get help from a lawyer with signing?
As mentioned above, while many documents may be signed electronically, there are still some doubts and logistical difficulties with electronic signing, and there are certain bodies, such as the Land Registry which still require "wet ink" signatures. Of course, consideration must also be given where relevant to the formal requirements of other legal systems.
We therefore recommend that you take legal advice in the following circumstances:
- the document you are signing is a deed;
- the document requires registration (e.g. with the Land Registry);
- one of the parties is an entity registered in another jurisdiction, the document is not governed by English Law or is likely to need enforcing overseas – there is no harmonisation of the law surrounding electronic signatures, so parties need to be comfortable that the signatures will be legally valid in all relevant jurisdictions;
- the document is a statutory declaration, affidavit or other document required to be signed in front of a lawyer, notary or commissioner for oaths;
- the document is a will, codicil or lasting power of attorney or a vulnerable party is involved - the conclusions of the Law Commission do not apply in respect of some documents;
- the document needs to be legalised (or 'apostilled') by an embassy – the Foreign & Commonwealth Office which provides this service in the UK, for example, is currently closed until further notice.
We also recommend that if the document relates to financing with a bank you check what the bank will accept.
We will keep you informed of any announcements or changes that make signing easier over the coming weeks and months. In the meantime, please do not hesitate to contact us if you need any assistance with a signing.
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