Law Commission confirms legality of electronic signatures

What are the current problems?

The stated context for the project is that, in today’s world, individuals and businesses demand modern, convenient methods of making binding transactions and increasingly conclude agreements entirely electronically. However, stakeholders told the Law Commission that “lingering uncertainty” around the legal validity of documents executed electronically is discouraging some parties.

What does the current law say about electronic signatures?

The report starts with a statement of the law regarding the validity of electronic signatures in a bid to end uncertainty around the legal validity of documents executed electronically and assist users of electronic signatures to proceed with confidence. The report concerns the law of England and Wales only.

The Law Commission’s high level conclusion is that an electronic signature is capable in law of being used to execute a document (including a deed), provided that (i) the person signing intends to authenticate the document and (ii) that any relevant formalities are satisfied; for example, that the signature be witnessed or in a specified form. An electronic signature is admissible in evidence in legal proceedings; for example, to prove or disprove the identity of a signatory and/or their intention to authenticate the document.

The Law Commission states that (save where relevant legislation, contractual arrangements or case law provides for the contrary) the common law adopts a pragmatic approach and does not prescribe any particular form of signature.

The courts have recognised a range of non-electronic forms of signature, including signing with:

• an “X”;
• initials only;
• a stamp of a handwritten signature;
• a printed name;
• a mark; and
• even, a description of the signatory if sufficiently unambiguous; for example “Your loving mother”.        

The Law Commission considers that electronic equivalents of the above forms of signature are likely to be recognised by the courts as legally valid. Indeed, the courts have variously held to be valid signatures: a name typed at the bottom of an email and clicking an “I accept” tick box on a website.

Signing deeds in the presence of a witness

In relation to deeds, the Law Commission’s view is that the current legal requirement for a deed to be signed “in the presence of a witness” requires the physical presence of that witness – even where the execution and attestation are done using electronic signatures.

What does the Law Commission recommend?

The Law Commission makes a number of recommendations to address some of the practicalities of electronic execution and the rules for executing deeds.

A key recommendation is for the Government to set up an industry working group to consider practical and technical issues associated with the electronic execution of documents, provide best practice guidance and consider potential solutions to the practical and technical obstacles to video witnessing of electronic signatures on deeds and attestation.

The Law Commission also recommends a future review of the law of deeds to consider whether the concept remains fit for purpose, including an examination of the statutory requirement for delivery; whether it should be amended or removed, for both paper and electronic deeds.

Further options for reform

The Law Commission has said that although the current law already provides for electronic signatures, the Government may wish to consider codifying the law to improve its accessibility. We can expect further consultation about the law on electronic signatures.

A copy of the Law Commission’s full report - Electronic execution of documents (Law Com No 386) September 2019 - is available here and an executive summary of the report is available here.