DATED: 28 MAY 2020
With millions of people now required to work from home, lockdown has caused significant practical and legal difficulties for the signing and witnessing of documents. In light of the unprecedented restrictions on individuals and businesses the Law Society has recently published guidance setting out the law on the use of virtual execution and e-signatures.
What is an electronic signature?
Electronic signatures can take different forms but most commonly are one of the following:
- A scan of a handwritten signature inserted into an electronic document
- A handwritten signature using e-signing software, such as DocuSign OR
- Text at the end of an electronic document showing the person who is signing’s name or initials.
Are electronic signatures legally binding?
Referring to a report produced by the Law Commission in September 2019 on the electronic execution of documents, the Law Society confirmed within their statement that electronic signatures can form valid execution, subject to the requirements below:
The person signing the document must intend to authenticate the document, meaning that where possible there should be evidence that the person intended to sign the document and be bound by it. This is to avoid a person unintentionally entering into a contract, without knowing what they were or were not agreeing to.
2. The formalities relating to the execution of that document
The person signing the document needs to be clear on:
- The type of document being signed; Primarily whether the document is to be signed as a deed, and therefore whether witnessing requirements can be met.
- The purpose of the document: The person signing the document may wish to consider the strength and appropriateness of using an electronic signature. Whilst an electronic signature may satisfy the legal requirement for the document it may be pertinent to consider the evidential weight of the signature should the signature be challenged be in the future.
- Any specific regulatory requirements for that document. Regard must also be given to the regulations governing certain documents. For example, there are specific requirements for the execution of Wills, as well as many HM Land Registry documents.
If the person signing the document is satisfied that the requirements have been met then an electronic signature can be used to execute a document.
During the current times, an added layer of complication is introduced if a document is to be executed as a deed, thereby requiring signing in the presence of a witness.
Within the Law Society’s initial statement, they did suggest that “whilst best practice advice remains that witnesses must be physically present when a deed is being executed, if this is not possible, practitioners should consider whether having clear evidence, such as a video recording, would be adequate to prove compliance with the law if a dispute arises.”
The Law Society later removed their guidance, with respect to witnessing a document via a video recording. As such, the position remains that a witness must be physically present to witness a signature, and this can not take place via FaceTime or Zoom etc.
Can a member of your household witness the document?
If a document is to be signed as a deed, the witness must be independent. The witness should not therefore be a spouse, partner or family member. This may prevent a member of your household acting as the witness.
It may therefore be necessary to arrange for somebody independent, such as a neighbour, to act as the witness whilst complying with the government’s recommended social distance of two metres.
In light of the difficulties of having documents executed correctly during the current restrictions, there have been calls for a modification of the law to provide businesses and individuals with greater confidence and certainty that they are able to validly use e-signatures for commercial documents.
The Law Commission has joined this call for reform by committing to “further engagement with the government on these issues”, specifically with regard to witnessing documents via video recording, however they recognise that this is “unlikely to be progressed until the lockdown has been lifted.”
If you would like advice regarding executing a business document, or have any other queries reading issues your business may be facing, please contact Chris Brightling, Head of Corporate & Commercial.
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