COVID-19 & electronic signatures
Published by Ince on 27th March 2020 -
This Q&A briefly considers how English law governed contracts can be signed using electronic signatures (“e-signatures”) at a time when signatories may need to sign documents remotely.
What is an e-signature?
In a commercial context an e-signature is often considered to mean a “wet-ink” signature scanned and sent by email. It can however take many forms including, a tick box on a website, a name typed at the bottom of an email or secure electronic signing software (e.g. Docusign and Adobe Sign).
Are e-signed documents legally binding?
In most cases, yes, provided there is an intention to authenticate the document and formalities are satisfied. There are circumstances where e-signing may not be acceptable, for example:
where stamp duty is payable on a document
for documents to be filed with UK tax authorities
for transfers of rights in intellectual property
for agreements which specify that they can only be varied by agreement “in writing and signed by hand”.
There are also practical issues to consider for the signing of deeds (see below).
What about e-signing deeds?
A deed must be signed “in the presence” of a witness. It is generally considered that this requires the physical presence of a witness when a deed is signed.
From an e-signing perspective, a deed signed with a witness present and attested by “wet–ink” (which is then scanned and emailed as a whole document) or using an e-signing platform (where a signatory signs a deed and a witness attests it) would be legally binding. Case law is not clear on whether it is sufficient for the signing of a deed to be “virtually witnessed” (e.g. via Skype, Facetime or WhatsApp). Given the uncertainty we would suggest you avoid executing deeds where a witness is not in the physical presence of the signatory.
It is best practice for a witness to be independent of a signatory, however in times of restricted movement it should be possible for family members/cohabitees to act as witnesses provided they are not a counterparty to the document.
What else should we consider when e-signing documents?
Agree protocols and procedures around remote signing in advance.
Whether the constitutional documents of a legal entity contain signature requirements e.g. restrictions on the use of electronic signatures and the signatories that have the power/authority to bind the company.
Whether any documents could be signed as contracts rather than deeds (for example, where the consideration is readily identifiable) as this would negate the need for witnessing.
That the e-signing system used provides a reasonable level of assurance that the document was executed by the signatory (for evidentiary purposes). Signing platforms tend to provide a certificate with information collected. If you or your lawyers are not co-ordinating signing you should ensure a copy is requested and sent to you.
Whether clauses could be inserted into contracts recognising the parties’ intention to be bound by an electronic signature.
The above does not constitute legal advice nor does it consider a complete list of issues to consider in the context of COVID-19. Should you have any queries, please do not hesitate to contact the author of this article or your usual contact at Ince.