E-signatures: UK government advised to consider codifying law

The Law Commission made the recommendation in a new report in which it confirmed the validity of using e-signatures for executing many documents, including deeds. E-signatures will be valid so long as "the person signing the document intends to authenticate the document and any formalities relating to execution of that document are satisfied", it said. Examples of the formalities that could apply include that the signature is witnessed or that the signature be in a specified form, such as handwritten.

The Commission also said that it can see no reason why electronic equivalents of well-established forms of non-electronic signature would not be recognised by a court as legally valid.

There is no prescribed format that an e-signature must take currently, the Commission said. It highlighted the fact that courts have deemed a variety of non-electronic forms of signature to be valid signatures, including the use of an 'X', initials only, a printed name or a stamp of a handwritten signature. In the case of e-signatures, courts have previously accepted a name typed at the bottom of an email, or a person clicking an 'I accept' tick box on a website as a valid signature, it said.

Corporate governance expert Tom Proverbs-Garbett of Pinsent Masons, the law firm behind Out-Law, said the report provides "a helpful statement of the law".

Proverbs-Garbett said: "The main reservation expressed by the Commission relates to witnesses: its view is that the current requirement that a deed must be signed ‘in the presence of a witness’ means that the physical presence of that witness is still needed. This accords with current common practice and such an otherwise affirmative statement will be reassuring to practitioners and their clients alike."

The Commission said in its report that there is scope to clarify the law on e-signatures further. It recommended that a multi-disciplinary industry working group be set up by the government to "consider practical and technical issues associated with the electronic execution of documents". That group should look into potential solutions to existing barriers to the use of video witnessing of e-signatures on deeds and in the context of attestation – the process by which a witness records, on the document itself, that they have observed that document’s execution, it said.

The Commission said that it might make the law on e-signatures "more accessible" if the law was codified. It said the government should look at whether to explore that option further.

A future review of the law of deeds was also recommended by the Commission.

"The report’s suggestion for future work in this area follows on from the Commission’s previous proposals, specifically that an industry working group should be convened to consider practical issues relating to the electronic execution of documents and to provide best practice guidance for the use of e-signatures in different commercial transactions as well as for individuals," Proverbs-Garbett said. "In particular, its suggestion that this working group also considers legislative reform to allow for video witnessing acknowledges the availability of video communication to anyone with a smart phone, although the practical and technical obstacles to such a process remain unaddressed."

According to the Commission's report, the Land Registry is one of the bodies that has expressed reservations about whether e-signatures can be "physically witnessed".

"An electronic document is a collection of data in a computer system, and the electronic signature is another data string that is attached to it," the Land Registry said, according to the report. "The e-signature is applied to the data within a software system, or in a hardware security module, or some other computing device. A person cannot witness that process. Any witness could not be sure that the signatory had electronically signed the data that the screen purports to represent, or that the screen represents the data that is intended to be signed. This will apply equally if a witness tries to view the signing by video link."

"Also, the screen is unlikely to show the whole document, perhaps just a small section where the signature is to be shown. If there were a subsequent challenge it may not be possible for the witness to confirm that they witnessed the signing of the whole of an electronic document," it said.