The Art of Law: The importance of Electric Signatures and points on how they work in the United Kingdom.

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  • The Art of Law: The importance of Electric Signatures and points on how they work in the United Kingdom.

Covid-19 has had a severe impact on our professional and personal lives. The enforcement of social distancing and protection measures to ensure safety from the virus has led to a variety of issues for the signing of deeds, contracts and other important documents.

Access to printers or scanners and restrictions to physical signing of documents and witnessing signatures have been severely impacted. Travel restrictions additionally have had adverse effects on the execution of documents leading to alternatives for signing documents.  

Current Position on Electronic Signatures

In September 2019 the current position from the law commission report (Electronic execution of documents) set out that electronic signatures can be used to execute documents provided that there is an intention to authenticate and that formalities are satisfied. This was proposed in particular to address legal uncertainties concerning electronically executed documents. This was endorsed by the UK Government in March 2020.

The Law Society (2016) and the Law Commission (2019) both confirmed that an electronic signature can be used to validly execute a document if:

i. the person signing the document intends to authenticate the document; and

ii. any execution formalities are satisfied.

In the UK electronic signatures have been legal since 2000 with the introduction of the Electronic Communications Act 2000. However, the most recent rules are applied through the Europeans Union eIDAS regulations (EU N910/2014) (EU Regulation on electronic identification and trust services for electronic transactions in the European Single Market). that were enforced in July 2016. With direct effect (before the impact of Brexit), the eIDAS defines:

Article 3 (9):  ‘electronic signature’ as ‘data in electronic form which is attached to or logically associated with other data in electronic form, and which is used by the signatory to sign’

Article 26:  An ‘advanced electronic signature’ as one which meets the following requirements:

i. it is uniquely linked to the signatory

ii. it is capable of identifying the signatory

iii. it is created using electronic signature-creation data that the signatory can, with a high level of confidence, use under his sole control, and

iv. it is linked to the data signed therewith in such a way that any subsequent change in the data is detectable.

Article 3 (12): A ‘qualified electronic signature’ as ‘an advanced electronic signature that is created by a qualified electronic signature creation device, and which is based on a qualified certificate for electronic signatures’.

Article 25(2) and (3) of the eIDAS regulation necessitates that a qualified electronic signature shall have equivalent legal effect of a handwritten signature and should be recognised based on its qualified certificate issued in any member state and will be recognised as a qualified electronic signature in all other member states.

Thus, the law regarding electronic signatures comforts the institution of electronic signatures in a society that encourages paperless transactions through digital innovation and through necessity from working remotely. Nevertheless, the important aspect of the format of the signature must represent interests of the signee and meet the correct criteria set by the relevant law.

Electronic Signatures

The law does not recommend a particular type of electronic signature. However, each of the following is a valid form of electronic signature:

  • An individual electronically pasting their signature as a pictorial image into an electronic version of the document.
  • An individual typing their name into a contract.
  • Signatures generated by e-signature platforms such as DocuSign.
  • An individual using an e-pen or finger to sign their name on a tablet.

In addition, Courts have held that a name typed at the bottom of an email, a scanned signature or clicking “I accept” on websites are valid signatures. The court decisions supplement the EU eIDAS regulation, which states that an electronic signature cannot be denied legal validity simply because it is electronic.

Under the recent law, the best way of avoiding disputes is still to circulate a formal contract for parties to sign and for the document to be dated once an agreement has been made. The act of signing can be made easier by using e-signature platforms. E-signature platforms have encryption software which helps to verify the identity of the signatory and gives weight to the e-signature and validates the process.

Can all documents be signed electronically?

Not all documents can or should be signed electronically. These limitations include:

1. Registries and regulator related documents that require ‘wet-ink’.

2. corporate limitations: articles of association prior to signature may include a restriction to sign electronically.  

3. Location of signature: tax considerations depending on where a document was signed may need considered before signing.

Witnessing of documents

Where there is a requirement for a deed to be signed in the presence of a witness the view is that the witness must be physically present. In the absence of legislation to provide clarity, it is commonly agreed that it remains best practice for physical attendance than a video link.

With current lockdown rules in place, the physical attendance requirement has become an issue. Currently it is best to ensure that the witness stands at least two metres away from the signatory with all necessary precautions taken without violating lockdown rules.

Documents for court proceedings

Prior to the lockdown, HMRC compelled paper transfers bearing ‘wet-ink’ signatures to be lodged with them for stamping with the relevant stamp duty paid. This condition has now been temporarily revoked and HMRC has now approved it ‘will accept e-signatures while coronavirus (COVID-19) measures are in place.

Legalisation of documents

Documents issued in one country that need to be legally recognised in another are required to undergo a process known as legalisation. Legalisation is normally performed by the relevant foreign embassy or by the government through the Foreign and Commonwealth Office or both.

The Office legalises documents and affixes the apostille thereby certifying a notary’s signature as genuine. Current guidance suggests that to find a notary to complete the document, the Office is only using apostilles through their business centre to existing registered users. Thus, an individual who wants to get a document legalised, will have to initiate the process by going through a third-party agency or service-provider who is already a registered business user, who will then liaise with the Office on their behalf. 

The Foreign and Commonwealth Office has not issued e-apostilles in consideration of COVID-19. However, since March 2014 the UK has operated an electronic register of apostilles (known as the e-register).

The following points should be considered as a consequence from Covid-19

  • Prepare for signature by communicating to all relevant parties as early as possible to indicate the appropriate method of signature.
  • Find a way of procuring scanned copies or pictorial images of manuscript signatures in advance so they can be easily included into electronic copies of documents.
  • Consider arranging for original documents to be posted between parties for physical signatures.
  • Check in advance if witnessing the document will be problematic and if so, find a suitable candidate.
  • Obtain access to e-signature platforms such as DocuSign in advance and work out the co-ordination of signatures on the platform.
  • As additional protection and to add evidential weight to the validity of an e-signature, include the following confirmations
    • An email from the signatory confirming they have signed the relevant document
    • An email from a witness confirming they were physically present to witness the signatory e-signing of the document; they witnessed the e-signature and they subsequently inserted their own e-signature into the document.

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