When can I use an electronic signature?

In February 2022, The Industry Working Group published its Report on eSignatures (the “Interim Report”), which outlines the current position on the use of electronic signatures, and how to bridge the distance between their limited adoption now, and a future where their use is commonplace.

One of the main challenges the report highlighted was the need to “de-mystify electronic signatures and demonstrate how they can be incorporated into transactions of all kinds”. In a recent Law Society panel discussion on the subject, both Lord Justice Birss, Deputy Head of Civil Justice, and Sarah Green, Law Commissioner for Commercial and Common Law, agreed that lack of market confidence was one of the main barriers to progress in this sector.

What can I sign using an electronic signature?

With some limited exceptions (which will be briefly considered below), it is widely agreed, not only by the Law Commission, but also by the panellists at the recent Law Society event, that “there is no legal barrier to using electronic signatures”.

For simple contracts, not only is the use of electronic signatures perfectly legal, the Interim Report actually outlines five high-level tips for best practice to facilitate their use, these include:
1.    Agree as early as possible that a document is to be executed electronically
2.    Where a signing platform is to be used, choose one that provides at least a minimum set of security/safety/functionality
3.    Consider whether to seek additional evidence to record the identity of the signatory
4.    Where possible, provide multiple options to vulnerable customers or counterparties
5.    Intention to authenticate should be easier to demonstrate for those with secure digital identities.

With respect to exceptions, it is recommended that electronic signatures are not used for wills and deeds. The main hurdle for their use is the requirement for a witness to attest to the main party’s signature. Although, in the case of deeds at least, a properly witnessed electronic signature would be acceptable, the Law Commission recommends that the witness be “in the same geographical location” as the signatory – somewhat removing the point of an electronic signature in the first place.

Further exceptions include HM Revenue and Customs and HM Land Registry documents, with the former department being slightly more open to the practice than the latter.

What next for electronic signatures?

In summary, it is certainly worth exploring the use of electronic signatures for any transaction one is entering into. Chances are that not only will their use be acceptable as far as the law is concerned; it will make the entire signing exercise quicker, smoother and more convenient than would be possible with the wet signature process.

Because that is the case, several recommendations have been made to the government by the Law Commission, including the creation a multi-disciplinary group designed to iron out practical and technical obstacles, and a review of the legislation in the area, both of which the government have accepted.   In addition, a pilot scheme is under way to explore remotely witnessed ‘Qualified Electronic Signatures’, so is appears that the limitations of the technology are being addressed even now.

The publication of the full Industry Working Group’s report is expected later this year, and in all likelihood, the Interim Report’s recommendations to adopt this technology will be reinforced by fresh evidence. In short, this technology is upon us and, like with so much in the tech sector, being an early adopter is key. Thomson Snell & Passmore is here to help you prepare for and adopt this technology now, before the wet signature becomes obsolete.