Law Commission Consultation on the Electronic Execution of Documents

27/09/2018

The law relating to signatures and other formal documentary requirements has been considered by the Law Commission on several occasions over the past three decades. As technological advances improve speed and efficiency in day-to-day life, the Law Commission reviews whether the law in England and Wales is keeping up with the demand for modern and convenient methods to effect binding transactions, while also ensuring that the law governing electronic signatures is sufficiently certain and flexible to remain fit for purpose in a global, digital, environment. ​

The admissibility of e-signatures as evidence in legal proceedings is given a statutory framework under The Electronic Communications Act 2000. However, this act does not concern itself with the validity of e-signatures.

The scope for the current consultation does not consider the execution of Wills nor the disposition of registered land, the latter having already been considered by the Law Commission in 2001 (whose recommendations are being implemented by HM Land Registry, albeit much slower than anticipated by the Land Registration Act 2002).The consultation does take into account the formalities required for execution of contracts for sale of land, consumer contracts, trust deeds and lasting powers of attorney.

The law requires certain documents to be signed and witnessed, and these formalities – if not strictly complied with – can affect their legal validity. The current consultation paper endorses The Law Society Practice Note – ‘Execution of a document using an electronic signature’ – published on 21 July 2016, which was limited to a review of commercial contracts in a business context.This practice note concluded that a simple contract could validly be executed using an electronic signature. An electronic signature satisfies a statutory requirement for a document to be signed under hand; companies that have adopted the Companies Act 2006 model articles may take a decision or pass a director’s written resolution using an electronic signature.

The provisional conclusions of the consultation (which closes on 23 November 2018) are that an electronic signature inserted with the intention of authenticating a document is sufficient to satisfy a statutory requirement that a document be executed under hand. The Law Commission goes even further than the Law Society Practice Note by proposing that, where witnesses are required to complete formalities of a deed, the electronic signature could be witnessed by another party not physically present, via a webcam or video link.This method was considered in the practice note but rejected as not best practice.The views of the Law Commission are not binding on the Government and legislation may be required to give effect to the proposal as to the legal requirements for witnessing documents.The Law Commission are due to review the legal requirements to effect Smart Contracts using blockchain technology in their next project for 2018 which may render the ‘wet’ signature requirement for execution of legal documents to the pages of legal history books. ​

MORE INFORMATION 

For more information and advice on e-signatures, their validity and the electronic execution of documents, please call on 01708 229444 or email us using our contact form.This article was written by Keeley Miller, Senior Associate at Pinney Talfourd LLP 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 of September 2018.

27/09/2018

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