E-Signatures – Can I sign electronically?

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

As someone who inevitably ends up chasing others for the physical return of hard copy signed documents, anything which can make the execution process more convenient for signatories, has to be welcomed as far as I’m concerned. With the new Electronic Identification and Signature Regulation (eIDAS RegulationDocuSign EchoSign) now effective, as of 1 July 2016, and with improvements in electronic signature applications such as and Adobe Sign (formerly ) making e-signature more practical, it’s worth a quick reminder of where the UK currently stands regarding e-signatures.

The eIDAS Regulation is intended to standardise provisions for electronic signatures across the EU, and it applies directly across all EU member states without any need for national law implementation, so although currently effective, it remains to be seen what its status will be following Brexit and the corresponding repeal of the European Communities Act 1972 that would surely accompany it, but that’s another issue for another day.

The Electronic Communications Act 2000

The UK position was previously governed by The Electronic Communications Act 2000, which allowed contracts to be conducted by electronic means, without the need for a “wet ink” signature. The Act defines an electronic signature as anything which:

‘is incorporated into or otherwise logically associated with any electronic communication or electronic data; and which purports to be so incorporated or associated for the purpose of being used in establishing the authenticity of the communication or data, the integrity of the communication or data, or both’.

This broad language inevitably leads to a wide array of forms which an electronic signature can take, ranging from scanned manuscript signatures to clicking a button on a website when placing an order. Adding a person’s name to the end of an email can even count as an electronic signature, depending on the circumstances, provided it demonstrated an intention to be bound by the terms. The judgment in the case of Metha v J Pereira Fernandes SA ([2006] EWHC 813 (Ch)) confirmed that any placing of an email address after a document has been transmitted is merely automatic and not necessarily intended to be a valid signature. However, the requirements for a signature could have been satisfied had the executing party actively typed his name into an email. In the case of Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd, it was held that the parties did intend to be bound by electronic signatures in e-mails and that could be the case even where only the first name or initials are used.

Concerns

Having such a broad variety of allowances has ramifications in terms of certainty, which may explain the relatively conservative uptake on e-signature use to date. If signed by hand, then a document comes with the certainty that the required or relevant person has been involved in the process. Many are reluctant to move away from this more personal approach to document signing, and to really embrace the now statutorily permitted e-signing.

There are concerns over evidentiary requirements, as emails and electronic communications can be tampered with. It may be hard to determine in any given case if the relevant person has signed a document.

Section 7(1) of the Act states that electronic signatures or related certificates can be admissible as evidence in any UK legal proceedings if the authenticity or integrity of an electronic communication is flagged as an issue, yet there are still questions surrounding public confidence in electronic signatures, as they are a new and innovative step. This makes certain individuals and organisations reluctant to use them and to move away from old ‘wet ink’ requirements.

Restrictions on e-signatures

According to English contract law, a contract can generally be in any form. However, there are certain contracts which are subject to specific regulation. Some contracts may be required to be made in writing. Additional care needs to be taken with contracts for the sale of land, equitable charges and a mortgage of a legal estate in land in particular.

Others may need to be made in deed form, and at present it is unclear whether a deed can be validly executed using an electronic signature. This has far reaching implications in the world of property law as transfers of land, powers of attorney and leases must all be executed in this form.

The requirement of needing a witness to a deed raises issues over signing electronically, as in principle an e-signature can be attached to a document by one party without any such witness being present. In response to a more globalised business world, the old requirements of close physical location between parties is taken away and in fact cross-border work is facilitated by electronic signing, so this too raises potential issues with deeds.

Changes to the Law

Electronic signatures which are digitally encrypted and based on a qualified certificate, which adhere to the qualification requirements in one particular state will now automatically be recognised across all member states, and be given an EU trust mark.

The eIDAS Regulation refers to three main types of electronic signature, as defined in Article 3, namely: the basic electronic signatures, advanced electronic signatures, as described in Article 26, and finally certain qualified electronic signatures, which are detailed in Article 29. The new Regulation offers a coherent and structured approach to e-signatures, and hopes to improve on the varied approaches to their use across the EU.

Expected impact of the eIDAS Regulations

It is hoped that the eIDAS Regulations will install more confidence in international and online electronic signature transactions by reducing many of the previous concerns over certainty and security, and in doing so, install further confidence in a public which is increasingly used to using mobile phones and digital and fingerprint recognition widely as part of day to day life. Time will tell, but we suspect that will indeed be the case. So which of you contract pioneers are prepared to give it a go?