Electronic Signatures under English Law

Electronic Signatures under English Law

MBM is able to complete transactions digitally through our chosen e-signature platform, Docusign. Signing documents electronically under English law is valid and has actually be valid for many years although it was not adopted by the legal profession generally due to doubts over the use of the technology. Any lingering doubts under English law regarding the validity of an electronic signature in meeting a statutory requirement for signature were dispelled by the Law Commission's 2019 Report on electronic execution.

The current law for electronic signatures (or e-signatures) in England is principally based on the Electronic Communications Act 2000, the Electronic Identification and Trust Services Regulation (EU/910/2014) (the “eIDAS Regulation”), which has direct effect in EU member states and the UK post-Brexit and case law relating to electronic signatures and signatures more generally.

What constitutes a contract under English law?

Contracts under English law do not need to take a particular form unless there is a statutory requirement for such form. An oral contract is a contract so long as (as is the requirement for all contracts) the contract fulfils the following criteria:

  1. An offer has been made by one party and accepted by another;
  2. There is consideration for the agreement, such as a purchase price;
  3. There is certainty for the terms of the agreement; and
  4. There is an intention by the parties for the agreement to be legally binding.

Some contracts require specific formalities as set out in statute, for example guarantees. Other contracts, such as agreements lacking in consideration or that grant a power of attorney, are required under English law to be executed as a deed in order to be enforceable and this means certain formalities must be followed. These are:

  1. The deed must be in writing;
  2. It must be clear from the face of the document that it is intended to take effect as a deed;
  3. The deed must be validly executed as a deed (see below); and
  4. The deed must be delivered.
How are contracts executed under English law?

Simple contracts may be executed under English law by signature of the parties to the agreement; either by an individual (if an individual is party to a contract) or by the director of a company (if a company is party to a contract).

Deeds must be executed under English law by the contracting party in the presence of a witness (or in the case of a company; by affixing its seal or executed by 2 directors, a director and company secretary, or one director in the presence of a witness). The witness must not be party to the contract but there is no legal requirement for the witness to be independent and not a family member, though this is considered best practice.

What is classified as an electronic signature?

The common law in England has always been flexible in recognising a range of types of signature, including signing with an ‘X’, initials only, a printed name, or even a description of the signatory such as “Your loving mother”. The courts have even gone one step further and have accepted electronic forms of signatures including a name typed at the bottom of an email or clicking an “I accept” tick box on a website.

In a recent High Court case (Neocleous v Rees [2019] EWHC 2462), Judge Pearce held that the auto-signature at the bottom of an email, although not added deliberately, serves as a valid form of e-signature. The reliance on this form of e-signature is not considered standard practice and instead sophisticated e-signing platforms such as DocuSign and Adobe Sign provide a platform to distribute and ingather documents.

The eIDAS Regulation sets out a number of different levels of signatures which can be used. For MBM’s House Policy on what type of signature we use for specific documents and a brief summary on the types of signature, please see House Policy.

Witnessing an electronic signature

Even if it is legally acceptable for a deed and other commercial contracts to be made in electronic form and signed by an individual using an electronic signature, the question then arises as to whether it is possible to satisfy the witnessing by wholly electronic means.

The Law Society of England and Wales and the City of London Law Society jointly instructed leading counsel to distil some of the emerging law around electronic signatures and provide practitioners with some clarity around what electronic signatures can and can’t be used for in the context of commercial contracts. 

The 2016 Law Society Note provides helpful guidance on the witnessing of eSignatures, mainly:

  • "In the opinion of Leading Counsel and the joint working party, (JWP) where a suitable signatory signs a deed using an electronic signature and another individual genuinely observes the signing (i.e. he or she has sight of the act of signing and is aware that the signature to which he or she is attesting is the one that he or she witnessed), he or she will be a witness for these purposes.
  • If that witness subsequently signs the adjacent attestation clause using an electronic signature or otherwise), that deed will have been validly executed.
  • In the opinion of Leading Counsel and the JWP, it is best practice for the witness to be physically present when the signatory signs, rather than witnessing through a live televisual medium (such as a video conferencing facility), in order to minimise any evidentiary risk as to whether the person genuinely witnessed the signing."

The 2019 Law Commission Report corroborates this viewpoint and concludes that a statutory requirement for witnessing and attestation is capable of being satisfied in the case of an electronically executed deed where the witness is physically present in the same location as the signatory. It suggests that this could be achieved in practice by the witness observing the signatory apply their electronic signature in the same location, and then attest to this fact by adding their own electronic signature to the same document. Helpfully, by way of example, DocuSign is able to time stamp when signatures were applied and provide the IP address for the device used to apply the signatures, providing some evidence that the signatories were in the same location when executing and witnessing the agreement.

Further to this, both reports appear to agree that the witness and signatory must be in the same location when a deed is signed electronically, and the witnessing of a document cannot be accepted if it has been remotely witnessed (for instance, by video link) where the witness is not physically present when the signatory signs the deed.

It could be argued that an opportunity has been missed here. The purpose of having any document witnessed is simply to provide an additional layer of evidence. However, that is precisely what certain types of electronic signatures do. The only difference is that the evidence comes from the use of technology. The law already recognises three levels of electronic signature with the most robust requiring extremely secure technical steps to establish the authenticity and integrity of the signature and the document being signed.   But by sticking with the requirement that this evidential layer must come from a witness rather than technology, the use of electronic signatures with deeds remains problematic.

Are electronically signed contracts legally enforceable under the English law?

Simple agreements under English law, requiring only a signature from each contracting party, can be signed electronically. Although it has been accepted that deeds can be executed electronically, there has been doubt as to whether the practical steps required to validate the signature of a deed (in particular satisfying the witnessing requirements) are fulfilled by electronic signing facilities.

Deeds that effect a transfer of land and are registrable with the Land Registry may not be executed electronically and neither may wills.  

Agreements have increasingly been executed by electronic means for some time. From physically signing an agreement and sending a scanned copy of that signed agreement to the other contracting party, contract execution has evolved to include the use of e-signing platforms such as DocuSign and Adobe

The Law Commission report confirms that an electronic signature is capable under English law of being used to execute a document (including a deed) provided that:

  • the person signing the document intends to authenticate the document; and
  • any formalities relating to execution of that document are satisfied. Examples of such formalities that might be required include that the signature be witnessed.