In its research, the Law Commission found that some lawyers used e-signatures for a range of transactions, whilst others used them rarely or not at all. The Law Commission's initial conclusions are that it is possible to use e-signatures to sign legally binding documents without any need for legal reform. However a full report, looking at a range of different documents, is expected in 2019.
The term ‘e-signatures’ encompasses everything from inserting scanned handwritten signatures into documents to public key infrastructure (a cybersecurity measure).
E-signatures are part and parcel of our digital society - we use them in business and personal transactions every day. The consultation paper suggests that the confusion about whether legally binding documents can be signed electronically is hindering the use of e-signature technology, together with more practical and technical issues concerning security and online identification. The intended purpose of the consultation is to address this uncertainty and to provide clarity, which will enable businesses to speed up transactions by becoming fully digital.
The consultation paper covers the signing requirements for a variety of documents, from personal transactions (such as contracts for the sale of land) to more business-oriented deals (such as high-value commercial contracts). Two types of documents are specifically excluded - Wills, and registered dispositions under the Land Registration Act 2002 .
While many transactions do not have any particular execution requirements, others involve a high degree of formality and are required by law to be in writing and executed as a deed. It is cases involving this level of formality which have led to particular uncertainty with e-signatures.
For a deed to be valid, it must be signed in the presence of a witness who attests the signature. Traditionally, a witness is physically present while a document is signed. The Law Commission proposes that it should be possible to witness an e-signature remotely by a shared signing platform or by video link technology, and then attest the signature of the document with the witness’s e-signature on the same document. The consultation paper however does suggest that a court might find that video link technology does not satisfy existing requirements, and that the law surrounding signing requirements should be more flexible to allow for modern signing procedures. The consultation also proposes that there should additionally be a review of the law of deeds, potentially as a separate Law Commission project.
The Law Commission has provisionally proposed that an industry working group, made up of lawyers, tech experts, insurers and businesses should be set up to consider the practical and technical issues arising from the use of e-signatures and to produce best-practice guidance.
Reform would give individuals and businesses more certainty when using e-signatures. Using e-signatures in more transactions would benefit businesses and individuals alike. Transaction costs could be reduced when compared with paper transactions, particularly in a competitive global, digital, environment.