Covid-19 – Practical tips for signing Scots law documents in corporate transactions during lockdown

Scotland

Home working and social distancing measures to address the spread of Covid-19 make it necessary for lawyers and their clients to find practical solutions to enable business to continue. In this LawNow we share some simple solutions for combatting the most common signing problems we are seeing in practice.

1. My lawyer has emailed a document and asked me to print it, sign it, then scan it back to her, but my printer isn’t working ….

  • You could sign the document electronically. Electronic signing, where an electronic document is signed using an electronic signature, may be used to sign most documents that are required in corporate transactions.
  • There are three main types of electronic signature recognised in Scots law (please refer to note 1). For most documents you may have to sign in corporate transactions (such as share or asset purchase agreements, joint venture agreements, commercial contracts, shareholder resolutions, board minutes, Companies House forms) a simple electronic signature will be a valid means of signing. (Please note that there are some practical and legal exceptions/restrictions which mainly affect real estate or security documents - please refer to note 2).

2. We are about to sign all of the agreed documents on completion of our transaction electronically and one of the lawyers has requested that all parties sign the documents by DocuSign on the DocuSign platform - why can’t I just type in my name or cut and paste in a signature that I already have?

  • A simple electronic signature is widely defined and would include something as basic as what you propose as an indication of your intention to be bound by the document. However, as well as thinking about what is technically valid, the lawyers are also concerned about the evidential value of the signatures in case of any future dispute. The advantage of using a commercial e-signature platform (such as DocuSign and Adobe amongst others) is that even the entry level ‘off-the-shelf’ product offered by such platforms offers additional security and authenticity checks for simple e-signatures, with enhanced security for the more advanced forms of signature.

3. One of the parties has refused to sign in this way – he wants everyone to sign ‘probatively’ – what does that mean and what can we do?

Agreement needs to be reached on how everyone is signing.

  • Using a probative (i.e. self-proving) means of signature creates an evidential presumption in Scots law that the document was signed (or, in the case of an electronic document, ‘authenticated’) by the signatory. What does that mean in practical terms? If a document isn’t signed in a self-proving manner and the document ever requires to be founded upon in court, additional time and expense may have to be be incurred in first having to establish in court that it was validly signed, unless the counterparty agrees that the document was validly signed.
  • The only form of electronic signature that is self- proving in Scotland is a ‘qualified’ electronic signature (please refer to note 1 below). Some providers (such as DocuSign) can offer this enhanced form of electronic signature but it is not the basic product – the ‘simple’ electronic signature most commonly used - and may be more time consuming or expensive to access as it involves a face to face identification procedure for each signatory. In each case, clients and their lawyers will have to decide if simple (non self-proving) e-signature of the document in question is acceptable or whether it is preferable to source and use a ‘qualified’ e-signature.
  • Considerations to be weighed up in deciding whether it is necessary to have self-proving signing include the value and context of the transaction, the likelihood or otherwise of any signatory arguing in future that they didn’t in fact sign (and the availability – and weight - of evidence to the contrary) and the easy availability (or otherwise) of self-proving electronic signatures.
  • The Law Society of Scotland have recently issued draft guidance to help solicitors to assess whether electronic signing is appropriate for different types of document. You can access that here.

4. Now we have all agreed that we don’t need our signatures to be self-proving. We will all sign the document using Docusign’s simple electronic signature, but I live alone and have no one to witness my signature. What do I do?

  • All parties have agreed to sign using a simple electronic signature (and have therefore, accepted that the signatures do not need to be self-proving). There is no legal requirement under Scots law for a witness to an electronic signature.
  • In the case of electronic documents, the equivalent of a signed and witnessed wet ink signature of a traditional hard copy document is a ‘qualified’ electronic signature, which is, as mentioned above, self-proving.

5. One of the documents I need to sign is to be registered in the Land Register so needs to be in traditional hard copy and not electronic form. It needs to be signed in a self-proving manner which requires me to sign it before a witness, but I live alone. What do I do?

  • This is a common problem at the moment. One possible option is to ask a friendly neighbour to stand outside your house/car window and witness you signing the document through the window! The signed document is then pushed under the window to the neighbour who signs it as witness using his/her own pen and avoiding touching the document.
  • Another possible option involves your solicitor witnessing your signature. After receipt of the hard copy document from your solicitor, you sign it, then return the document by post/courier to your solicitor. Your solicitor then e-mails you a PDF of the signed document it has received from you. Next you and your solicitor participate in a video conference with the PDF on the screen and you verbally acknowledge to your solicitor that the signature on the PDF is your signature and ask him/her to witness your signature: “Yes that’s my signature; please witness it”. Your solicitor will then sign the hard copy document as a witness immediately following your ‘acknowledgement’ of your signature.

6. Can I sign English law documents electronically?

  • Please refer to our LawNows covering English law and practice which have significant differences:

For further information on electronic signature of Scots law documents, please refer to: Scottish law position on e-signing in finance transactions.

This is a simple guide to help with basic queries. It is not intended to be legal advice. Each specific transaction will need to be considered carefully. Please speak to your usual CMS contact for more information or to any of the contacts in this article.

Note 1

Scots law follows European law in distinguishing between three main types of e-signature:

Simple electronic signature – This most basic form of e-signing includes mechanisms such as a signatory ‘copying and pasting’ an electronic image of his or her signature, adding their name with a stylus or finger, or simply typing their name into a document. Several web-based platforms (such as DocuSign) allow for execution versions of documents to be shared electronically and provide simple digital e-signatures to be added by the counterparties. The advantage of using an electronic signing platform is that they usually offer additional security and authenticity checks even for simple e-signatures, with enhanced security for the more advanced forms of signature referenced below.

Advanced electronic signature – These forms of signature are more secure as the signatory has a greater level of control over their use and any change to the signature is detectable. They are uniquely linked to the signatory; capable of identifying the signatory; created using means that the signatory can maintain under their sole control and linked to the data to which it relates in such a manner that any subsequent change in the data is detectable.

Qualified electronic signature –This is the highest standard of electronic signature under European law and is the only form of electronic signature which is self-proving (‘probative’) in Scots law (please refer to question 3 above). This is effectively the electronic equivalent of a physically witnessed signature in Scots law; in Scotland, no physical witness is required (or adds anything) when a document is being signed electronically.

Note 2

Validity of electronic signature in Scotland 

Under Scots law, electronic signatures are valid for execution of all documents other than wills and testamentary writings. However, there are some practical, as well as legal, restrictions on their use:

  • A special form of electronic signature, an ‘advanced electronic signature’(please refer to note 1) must be used for valid execution of those documents that require to be in writing under section 1(2) of the Requirements of Writing (Scotland) Act 1995. These are mainly rights in relation to land, gratuitous unilateral obligations and some trusts.
  • Electronic signatures cannot currently be used for any document which requires to be registered in the Land Register of Scotland, the Register of Sasines or the Books of Council and Session (for example, a disposition or lease).