As executing documents by electronic signature (e-signature) becomes increasingly common, related law and practice continues to develop. This month the Law Commission published its report on electronic execution of documents in England and Wales (the Report), following its consultation of August 2018 (the Consultation). The Report provides useful confirmation of the English law position on e-signatures though stops short of recommending law reform. Those hoping for an imminent relaxation of the signing formalities for deeds will be disappointed, but the Law Commission does advocate a future review of the concept of deeds itself.
Validity of e-signatures
The Report concludes that, under current statute and case law, documents (including deeds) can be validly executed by e-signature subject to (a) the signatory (or the person on whose behalf the document is signed) intending to authenticate the document – ie intending to be bound by its terms, and (b) any formalities for execution of the document being satisfied (for eg, the requirement that a signature to a deed is witnessed) – if formalities are not met, the document is not validly executed. The Report also confirms the current position that e-signatures are admissible in evidence.
As the law already provides for validity and admissibility, the Law Commission believes legislative reform is unnecessary. However, it suggests a general legislative statement from Government might offer clarity, make the law more accessible to business and consumers, and encourage use of e-signatures – in turn bringing greater efficiencies. It recommends an industry working group be established to examine best practice and technologies for e-signatures.
Requirements for witnessing
In the Consultation, the Law Commission had queried whether a witness must be physically present when a deed is signed by e-signature, provisionally proposing a more agile solution of witnessing documents by video link, with the witness then attesting the document. Though most contributors to the Consultation supported this, they also raised practical concerns (eg over the mechanics of video witnessing) and over risks such as fraud. For now, the Report reconfirms the current position: where a deed is being signed (electronically or otherwise) in the presence of a witness, that witness must be physically present. We summarised our recommended steps for e-signing and witnessing of deeds in our previous client briefing, and these are unchanged. The Report notes that video witnessing might be a future option, and recommends the working group consider this along with other practical steps involved in e-signing and witnessing of deeds.
The demise of deeds altogether?
More broadly, the Consultation asked whether the law on deeds warranted review. Though a majority of consultees did not agree, strong arguments in favour have led the Law Commission to recommend a review to assess whether the concept of deeds ‘remains fit for purpose’ in modern times.
E-signatures is still a relatively new area of law, and there remain some open questions. Different jurisdictions have different approaches to e-signatures, and parties to cross-border transactions will need to bear this in mind. Neither the Consultation nor the Report address the implications of e-signatures for court documents, and we comment on this in our Risk blog. And there is other complex tech to consider: the Law Society’s UK Jurisdiction Taskforce is expected to report on the status of cryptoassets and smart contracts under English law later this year: how to meet a statutory signature or ‘in writing’ requirement in the context of smart legal contracts will be key. As tomorrow’s innovations disrupt today’s established practices, we expect law and practice to continue developing to keep pace.
Freshfields contributed to the Law Commission’s consultation through our membership of certain industry committees and groups. Note that registered dispositions of land are outside the scope of the Report.