Electronic Signatures Considered Legally Binding In Most Cases
Electronic signatures are legal binding, including in situations where there is a statutory requirement for a signature.
According to the Law Commission, electronic signatures can be used in most cases, including where there is a statutory requirement for a signature. This is not the case where the law or a relevant contract makes separate rules about a specific document or type of document (as the Law Commission has concluded is probably the case for wills).
Whilst businesses have been using electronic signatures for some time, many people have questioned the validity of an electronic signature in certain situations. The Law Commission’s report has ended ambiguities and set out a number of recommendations which could help create a more robust confidence in the use of electronic signatures in the future.
Many have been concerned about vulnerable people being put at greater risk because of the perceived ease of committing fraud through electronic signatures.
A number of practical concerns around the reliability of e-signature technology and the use of hybrid approaches offering both a hand written and electronic signature were also considered as potential difficulties.
Many were also anxious about using this form of technology to finalise documents which need signatures to be witnessed. Whilst deeds can be witnessed remotely via a video link, the Law Commission deemed current law as insufficiently set up to allow for ‘remote witnessing’ using video links.
To address these concerns, the Law Commission recommended:
- The creation of an industry working group – to consider practical and technical issues around electronic signatures and provide best practice guidance for their use in different types of transactions.
- Video witnessing for deeds – the industry working group should look at solutions to the practical and technical obstacles that exist to video witnessing. Following this work, Government should consider legislative reform to allow for this.
- A future review of the law of deeds – to consider broad issues about the effectiveness of deeds and whether the concept remains fit for purpose and specific issues which have been raised by stakeholders. The review should include deeds executed on paper and electronically.
English law is already considered fairly lenient in how it recognises signatures with ‘X’, initials, printed name and description of the signatory considered legally binding. The recognition of e-signatures amongst these more traditional signature types aligns with the EU’s eIDAS regulations which stipulate that an electronic signature must be considered legally valid if it complies with the legal definition.
Stephen Lewis, Commercial and Common Law Commissioner, said:
“Electronic signatures can offer quicker and easier transactions for businesses and consumers.
“Our report aims to provide an accessible statement of the law which makes it clear that an electronic signature can generally be used in place of a handwritten signature as long as the usual rules on signatures are met.”
Does the Law Commission’s report and recommendations provide greater clarity around the use of electronic signatures? What will this mean for the conveyancing sector?