Law Commission and Electronic Signatures

August 20, 2018

Electronic signatures can be used to sign formal legal
contracts under English law, the Law Commission has confirmed.

It makes that statement of the law in its a
set of preliminary conclusions
which accompany the launch of a consultation
on electronic signatures. The publication of a firm view is said by the Commission
to have the aim of sweeping away ‘the current uncertainty in the law, allowing
businesses to speed up transactions by going fully digital’.

The Commission also proposes:

  • that electronic signatures could be witnessed via a webcam
    or video link
  • the formation of a Government-backed industry working group
    to consider the on-going practical issues around the use of electronic
    signatures and how these can be improved.

The consultation seeks views on whether the law should go
even further to facilitate the electronic execution of deeds, by allowing a
witness to use a real-time, shared online platform to witness documents from
different locations.

Law Commissioner Stephen Lewis said:

‘Contract law in the UK is flexible, but some businesses are
still unsure if electronic signatures would satisfy legal requirements. We can
confirm that they do, potentially paving the way for much quicker transactions
for businesses and consumers. And not only that, there’s scope, with our
proposals for webcam witnesses, to do even more to make signing formal
documents more convenient, speed up transactions and get business booming.’

The Law Commission refers to Statute of Frauds, which
requires certain documents to be in writing and signed. While that requirement
still has some application today, the Commission takes the view that the world
has moved on and many expect transactions to be instant and often digital,
regardless of the type of transaction.

The EU-wide eIDAS regulation says that an electronic
signature cannot be denied legal validity simply because it is electronic and that
electronic signatures are admissible in evidence in legal proceedings. While
the Electronic Communications Act 2000 mirrors the admissibility provision in
eIDAS, it does not expressly provide for the validity of electronic signatures.

The Commission’s view is that this lack of clarity in the
law is discouraging businesses from executing documents electronically when it
would be quicker and easier to do so. It suggests that this may
disproportionately affect small businesses and start-ups, which do not have
access to legal expertise in the same way as larger commercial businesses.

The Electronic Execution of Documents consultation is at:
The deadline for responses is 23 November 2018.

This work came out of the Law Commission’s 13thProgramme
of Law Reform
 and complements work on smart contracts, which is also
currently ongoing. The work focuses on two aspects of the electronic execution
of documents:

  1. The use of electronic signatures to execute documents where
    there is a statutory requirement that a document must be “signed”.
  2. The electronic execution of deeds, including the
    requirements of witnessing and attestation and delivery.