Is an E-Signature legally binding?

28/07/2016

Many statutory requirements for written documents to be signed can be satisfied through digital signatures states The Law Society.The Law Society has now issued a practice note, aimed at increasing confidence in the use of e-signatures in day-to-day legal work.

At present many solicitors are unhappy about using digital signatures because of uncertainty as to whether they can be relied upon in the event of a party disputing the document.

A joint working party of The Law Society and The City of London Law Society has been working on the issue.

European regulation has established a legal framework on electronic ID and trust services (the eIDAS Regulation) which came into force on 1st July 2016. Although Brexit could see this regulation not being enforced directly, it will be enforced until such time as we exit and we would expect the regulation to be repeated in English law.

The Law Society’s practice note sets out reasoned arguments why electronic signatures should be accepted as satisfying statutory requirements. The practice note recites court of appeal judgments which have commented on the issue.

It is often very frustrating at the conclusion of lengthy commercial negotiations to have a delay of two, three or four days while hard copies of original signed documents are exchanged by the parties, in the past these delays have been reduced by the use of telephone completions, and solicitors undertakings, but we would expect to see a much greater use of digital signatures going forward.

Critically, any client or solicitor practice using digital signatures will need to ensure they have the very best cyber security. A pessimist would say that the use of digital signatures only increases the possibilities of fraudulent transaction occurring.

What Pinney Talfourd says

In our opinion the best form of safe and secure commercial transaction is one where a client is able to meet the solicitor face to face and sign original documents that are used to effect transactions. This provides security for all concerned.

However, at Pinney Talfourd we recognise that there are occasions when the use of digital signatures with appropriate safeguards might well be appropriate, for example when a client is abroad and physically unable to sign.

More information

Please contact Stephen Eccles in our Dispute Resolution Department for more advice on safe use on this subject and online fraud on 01708 229444.

This article was written by Stephen Eccles, Head of our Dispute Resolution Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at July 2016.

28/07/2016

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