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Electronic signatures – are they valid?

07 May 2020 | Karen Davies

Most of us will now have been working from home for well over a month. Businesses are adapting their usual practices in maintaining ‘business as usual’, but lockdown is still raising particular challenges around how to perform actions that usually would have needed a physical presence.

Signing documents with a “wet-ink” signature may not be practical, especially where signatories have limited access to printing, scanning and post. This guide considers how contracts can be signed using electronic signatures (“e-signatures”).

An e-signature can take many forms including scanned manuscript signatures, manuscript signing on screen, clicking on “I accept” or a tick box on a website, typing a name (either manual or automatic e.g. email signatures) or through secure electronic signing software.

Validity

An e-signature is capable of being legally valid method of signing documents provided that:

  • the person signing the document intends to sign and be bound by the document;
  • any formalities required by law are satisfied; and
  • legislation or contractual arrangements do not specify otherwise.

Formalities

A summary of some formalities on the execution of certain types of contracts:

Type of Contract

Requirement

Simple Contract

 

No specific formalities – offer, acceptance, consideration, certainty of   terms and intention to create legal relations.

Deed

Depends on the nature of the executing party, but generally must be in writing, signed, witnessed and delivered.      

Guarantee

Must be in writing, or evidenced by writing, and signed.

Transfer of Shares

Must be made in writing but not necessarily by deed, in the form provided in Schedule 1 to the Stock Transfer Act 1963.

Contract for the sale of land

 

Must be in writing and signed, incorporating all the terms which the parties have expressly agreed in one document (or, if contracts are exchanged, in each document).

Power of Attorney

Must be executed by way of deed.

Lasting Power of Attorney

Must be executed as a deed in a prescribed form, include prescribed information as to its purpose and effect and include a certificate given by a third party.

Unilateral Promise

Must be executed by way of deed.

It is best practice to return the entire document with the signed signature pages included.

Where a Witness is required

In light of the current social distancing measures, it may be difficult to sign in the presence of an independent witness. It should be possible for a family member/partner to act as a witness provided they are over the age of 18 and not a counterparty to the document.

Given the uncertainty of the law, we would suggest you avoid executing deeds where a witness is not in the physical presence of the person signing.

Other considerations

You should also consider:

  • when signing on behalf of a company, whether the articles of association contain signature requirements such as restricting the use of electronic signatures;
  • whether documents could be signed as simple contracts rather than deeds;
  • that you agree with the counterparties the procedure you will take with remote signing in advance of completion; and
  • whether clauses should be inserted into contracts recognising the parties’ intention to be bound by an e-signature.

We will keep you informed of any announcements or changes that make signing easier during this time. In the meantime, please contact our Corporate and Commercial team on 0117 906 9400 or by email at enquiries@gregglatchams.com if you require any assistance.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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