Law Commission and Electronic Signatures

The Law Commission has published its view on the validity of electronic signatures, endorsing their use, and is seeking views on proposals for improving the law affecting the use of such signatures

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: https://www.lawcom.gov.uk/project/electronic-execution-of-documents/. 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.

Published: 2018-08-21T10:40:00

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