eSignatures

A digital signature, like a conventional handwritten signature, identifies the person signing a document. Unlike a handwritten signature, a certificate-based signature is difficult to forge because it contains encrypted information that is unique to the signer. It can be easily verified and informs recipients whether the document was modified after the signer initially signed the document.

eSignature Legality Summary

Under English law, a written signature is not necessarily required for a valid contract – contracts are generally valid if legally competent parties reach an agreement, whether they agree verbally, electronically or in a physical paper document.

Case law, including the decision of the Court of Appeal in Golden Ocean Group v Salgaocar Mining Industries, specifically confirms that contracts cannot be denied enforceability merely because they are concluded electronically.

To prove a valid contract, parties sometimes have to present evidence in court. Digital transaction management solutions provide electronic records that are admissible in evidence under s7(1) Electronic Communications Act 2000 (“ECA 2000”), to support the existence, authenticity and valid acceptance of a contract.

However only a Qualified Electronic Signature shall have the equivalent legal effect of a handwritten signature.

In addition, Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market (the “eIDAS Regulation”) came into force on 1 July 2016. The eIDAS Regulation repealed and replaced the e-Signatures Directive (1999/93/EC) and is directly applicable in the 28 member countries of the European Union.

The eIDAS Regulation is technology neutral and defines three types of electronic signature (SES, AES, QES). Article 25(1) provides that an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or does not meet the requirements of a QES.

Articles 25(2) and (3) give a QES the same legal effect as a handwritten signature and ensure that a QES recognized in one Member State of the EU is also recognized in other Member States.

Finally, Recital 49 allows national law to set requirements regarding which type of electronic signature may be required in which circumstances.

Use Cases for Standard Electronic Signature (SES)

Use cases where an SES is typically appropriate include:

  • certain HR documents, such as employment contracts, benefits paperwork and other new employee onboarding processes
  • commercial agreements between corporate entities, including NDAs, procurement documents, sales agreements
  • consumer agreements, including new retail account opening documents
  • certain real estate documents, including real estate sale and purchase contracts, leases under 3 years and any other property documents usually signed under hand (e.g. not as a deed) and where such documents are not to be lodged at the Land Registry, or registrable
  • certain securitization documents, such as a guarantee

Use Cases That Are Not Typically Appropriate for Electronic Signatures or Digital Transaction Management

Use cases that are specifically barred from digital or electronic processes or that include explicit requirements, such as handwritten (e.g. wet ink) signatures or formal notarial process that are not usually compatible with electronic signatures or digital transaction management.

  • various lease documents, including leases of 3+ years, deed of variation of lease, lease surrenders, and deeds ancillary to leases (e.g. rent deposit deeds, licenses to alter, assign or underlet)
  • real property documents submitted for registration with Land Registry and Land Charges Registry, including deed of transfer of title, application for adverse possession, legal mortgage/charge, release of legal mortgage/charge, deed of easement, deeds of variation
  • documents for HM Revenue and Customs, where stamp duty is payable
  • some documents such as company accounts to be registered with Companies House outside its web-filing service
  • various family law documents, including prenuptial agreements, separation agreements, deeds of variation, deed of disclaimer

[1] An AES is an “advanced electronic signature”, a type of electronic signature that meets the following requirements: (a) it is uniquely linked to the signatory; (b) it is capable of identifying the signatory; (c) it is created using means that are under the signatory’s sole control; and (d) it is linked to other electronic data in such a way that any alteration to the said data can be detected.

[2] A QES is a specific digital signature implementation that has met the particular specifications of a government, including using a secure signature creation device, and been certified as ‘qualified’ by either that government or a party contracted by that government.

Local Technology Standards

As part of the European Union, the UK defines different classes of electronic signatures, as specified in Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC (eIDAS Regulation), including qualified electronic signatures in the local Electronic Signature Regulations (“ECA 2000”).

A Qualified Electronic Signature is automatically granted the equivalent legal effect of a handwritten signature.

Where a Qualified Electronic Seal is used (by legal persons such as corporate entities) the integrity of the data and correctness of the origin of the data shall be presumed. The enforceability or validity of a document signed by electronic signature, regardless of technology or certification, depend on the evidence associated with a particular signature (or seal).

Can an electronic signature satisfy a statutory requirement for signature?

Applying the function over form approach it would appear that each type of electronic signature is generally capable of demonstrating the intent of the signatory to authenticate the document and (subject to any specific requirements of the statutory context concerned) satisfying a statutory requirement for signature.

This analysis is consistent with the conclusions reached by the Law Commission in its 2001 advisory paper on e-commerce (see E-commerce: formal requirements in commercial transactions: Advice from the Law Commission (December 2001), paragraphs 3.24 -3.40) and is also reflected in the pragmatic approach taken by the courts in cases such as Pereira, WS Tankship and Golden Ocean Group. 

For example, in Pereira, the High Court considered that the requirement for signature under section 4 of the Statute of Frauds could have been satisfied if the guarantor had typed his name into an email containing the essential terms of an offer of a personal guarantee.

Similarly, in Golden Ocean Group, the Court of Appeal accepted that if a person puts his name on an email to indicate that it comes with his authority and he takes responsibility for its contents, then it will be a signature for the purposes of the Statute of Frauds. This is the case even where only the first name, initials or perhaps a nickname is used.

Accordingly, if a party creates and sends an electronically created document including an electronic signature of the form explained above, they will be treated as having signed it to the same extent that they would in law be treated as having signed a hard copy of the same document using a “wet-ink” signature.

The fact that the document is created electronically as opposed to a hard copy makes no difference (Pelling J, Pereira, at paragraph 28).The 2016 JWP e-signature note (see box, Law Society and CLLS practice note on electronic signatures), takes the view that:

  • An electronic signature is capable of satisfying a statutory requirement for a document to be signed provided that the signatory inserts the electronic signature in the appropriate place in the document with the intention of authenticating it.
  • Golden Ocean Group is authority that an electronic signature has the same status as a wet-ink signature, the key question being whether or not the signature is intended to authenticate the document.

Consistent with this analysis, in its 2018 consultation paper on electronic execution, the Law Commission provisionally concludes that under current law, an electronic signature is capable of meeting a statutory requirement for signature provided an authenticating intention is demonstrated (see paragraph 7.6, Law Commission consultation paper no.237: Electronic execution of documents).

This view is not limited to a particular type of electronic signature. The Law Commission also considers that an electronic signature inserted with the intention of authenticating a document would be sufficient to satisfy a statutory requirement for the document to be executed under hand.