Signatures for the digital age

Business people often type their name at the end of emails setting out agreements. And some have taken to inserting images of their signatures onto documents with a signature block, but most will not have considered whether this actually constitutes valid execution of a document.

There can be little arguing that signing your name, or even your initials, with pen and ink at the end of a document is sufficient for the purposes of execution. However, the position has not always been clear when it comes to the use of electronic signatures. This has now been resolved as, on 4 September 2019, the Law Commission took progressive steps to clarify the position in the ever-evolving digital age.

Notwithstanding the fact that commercial contracts are being entered into on a daily basis between parties, an air of uncertainty has been cast in recent times as to whether signing a document electronically makes it a validly executed document.

Parole Evidence Rule

If you think about it, for simple contractual agreements, digital signatures and emails must be valid. Agreements can afterall be oral and evidenced purely by what the parties said. Writing-up such agreements either informally by email or formally in lengthy, professionally drafted documents are simply taking steps to provide certainty and deal with the finer points. As such, signatures of any kind on these kinds of documents are purely evidential – the Parole Evidence Rule.

However, with the Law Commission’s publication of its report, “Electronic execution of documents”, it has confirmed that the use of an electronic signature would constitute valid execution, even where statute requires for the more traditional “wet-ink” signature.

As always, this does not come without its limitations, insofar as the signatory must both:

1. Intend to authenticate the document which they are signing
2. Observe any necessary formalities, for instance, in the case of documents which are required to be executed as deeds, that they are executed in the presence of a witness.

This report of the Law Commission builds upon the more relaxed approach that the courts have taken in recent times, whereby it is now accepted that non-electronic and unorthodox forms of signing documents, such as signing with an “X”, with initials or even a description of the signatory (provided it is unambiguous and the signatory is identifiable.).

This long-awaited guidance from the Law Commission did not stop at the execution of simple documents, it went one step further and delved into the uncharted, and arguably archaic, execution of deeds.

One of the requirements of a document to be validly executed as a deed is that it should be executed or attested in the presence of a witness. The Law Commission did not see this as an issue, however, and has stated that even an electronic execution of a document, which ordinarily the law requires to be witnessed, will be valid as long as both the witness, who may also attest or execute the document using an electronic signature, and the signatory are present at the same time.

The Law Commission was, once again, quick to caveat this by insisting that valid execution requires both signatories to be physically present at the same time. In a bid therefore to prevent any abuse, the Law Commission has doubted that witnessing through video calls or other mediums of “remote witnessing” would be sufficient to satisfy the witnessing requirements. Although it heavily doubted that this would be sufficient, it did not completely rule it out. Therefore, whilst it considers that the current law does already provide for electronic signatures, so as to try and create a coherent set of rules, it has urged the Government to now take the opportunity to legislate. In light of this report, the Government should particularly take this opportunity to legislate if it considers that there are certain documents which should be excluded from both the ease and convenience that is electronic execution, perhaps to underscore the gravity of the document being entered into.