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The Rise of Electronic Signatures

The Law Commission confirmed on 4th September 2019 that, in its opinion, electronic signatures can be legally recognised as valid on almost all legal documents.

Whilst the concept of an electronic signature is becoming more and more common, be it through delivery receipts or a click-wrap agreement online, the Commission’s recent recognition helps to promote the electronic signature’s place as an indication of a legally binding pact.

The e-signature promotes transactional efficiency and its new official legal status removes doubt surrounding its enforceability.

 

Types of e-signatures

E-signatures can take many forms, such as:

  • Printing of a name
  • A simple ‘X’
  • Initials
  • A handwritten signature stamp
  • An unambiguous description, e.g. ‘Your Father’
  • Any other mark regardless of whether the person signing is capable of writing

 

Limitations

Despite what may be regarded as a positive advancement of the law into modern life, this development is not without limitations.

  • Not all documents are included

As previously mentioned, the Commission considers that the electronic signature can render most documents legally binding. However, the Commission report did not consider wills or land registration, which, some would argue, are amongst the most desirable areas for use of an electronic signature in the interests of efficiency. There are areas which no doubt suggest themselves for further consideration of electronic signatures by Land Registry and Law Commission.

 

  • Issues with fraud

For example, there are concerns that electronic signatures, which are by nature less individual than a personal handwritten signature, could increase fraud.

 

  • Witnessing a signature

The Law Commission also noted the difficulties that arise when there is a legal requirement for a signature to be witnessed by an independent third party. In this regard the Commission noted that it would be sensible for there to be further reform of the law in order to clarify the position.

 

Room for development

Despite its conclusions, the Law Commission did acknowledge that some of the respondents to its consultation voiced concerns regarding the enforceability of electronic signatures. From the limitations listed, it would be sensible for there to be further reform of the law to clarify any uncertainty.

The Commission did consider whether it would be helpful for a legislative statement to be made confirming that electronic signatures are valid to remove doubt. Whilst recognising that this was a finely balanced question, the Commission came to the conclusion that a statement was not necessary; instead pointing to other options such as obtaining an authoritative court ruling on the issue.

 

What this means in practice

The newly promoted status of electronic signatures by the Law Commission is to be welcomed in providing some further legal re-assurance. As with most legal developments, there are concerns; in this case, surrounding security and legitimacy. There does also remain some doubts about the enforceability of electronic signatures. For these reasons, it is likely that we won’t be moving into a completely digital era just yet and ‘wet ink’ signatures will be with us for the foreseeable future.

 

If you would like to discuss these issues further, please contact our team of Corporate & Commercial lawyers today on 0115 9 100 200, or send them an email.

Posted on October 1, 2019

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