Covid-19: The use of electronic signatures (e-signatures)

Signing Documents and Covid-19

E-signatures are now considered valid subject to certain requirements. In light of the recent Covid-19 pandemic the use of e-signatures has increased and many law firms have started using this form of signature within their deeds and documents to reduce the risk to their clients and themselves

At present it is acceptable for deeds and documents to be signed with e-signatures, but only under the following circumstances:

  • The requisite intent and appropriate authority (you intend to sign via this method) have been applied to use e-signatures;
  • There are no restrictions within a company’s constitutional documents on the use of e-signatures by a legal entity;
  • It is permitted by the law of the home country for an overseas (non-UK) company and its Articles of Incorporation permits e-signatures; and
  • The terms of any contract permit the use of e-signatures.

What is an E-signature?
     

The following constitutes a valid e-signature:

  • a person typing their name into a contract or email with contractual terms;
  • a person pasting a jpeg scan of their signature into an electronic version of a  contract in the execution block;
  • a person clicking an “I accept” tick box;
  • a person using an e-signature platform to click to insert a typed or handwriting font into the execution block; or
  • a person using an e-pen or finger to sign their name on a tablet.

Type of Signature

There is no specific form of signature to be used. However, you will need to consider whether the correct individual has signed the document and ensure that the document has not been fraudulently executed.

E-signatures in Legal Proceedings

A document or deed which has been executed with an e-signature is admissible as evidence if used during legal proceedings. This means that documents executed by e-signature can be used as evidence, unless any opposing party can provide contradictory evidence. Ultimately, e-signatures are enforceable and valid provided the usual requirements for execution have been complied with.

Can all documents be executed by E- Signature?

Certain documents should not be signed with an e-signature and these may include:

  • Registries and regulators:  Documents which are registerable at HM Land Registry will require a “wet-ink” signature and e-signatures are not accepted. Furthermore, if taking share security, blank stock-transfer forms should also not be signed electronically in case they need to be submitted to HMRC.
  • Statutory declarations: The Law Society have maintained that any declaration must be made in the physical presence of a solicitor or commissioner of oaths at the time the declaration is made.
  • Location of signature: If the location of the signature or document is required to be made in a specific jurisdiction then the parties will need to take into account whether obtaining an e-signature is the best option.
  • Company Constitution: In some circumstances, a company’s articles of association can limit the use of signatures to prevent the use of e-signatures. This is why it is important to check for any drafting restrictions within a company’s constitutional documents.

Are there any limits on Jurisdiction?

As with any other legal document, the same rules apply for overseas legal entities where e-signatures are used to execute the contract. The document or contract must be executed pursuant to the laws of the territory in which they were incorporated.

There are some jurisdictions which may require documents to be notarised or apostilled, and this may present difficulties for electronically signing documents. A full check on the governing laws of any overseas countries is required to ensure e-signatures are acceptable.

Witnessing documents

The rules for witnessing a deed or document still apply, however, except where the deed is a Will, a witness does not necessarily need to be independent from the person signing. Therefore, a spouse, civil partner or cohabitee can witness an e-signature provided they are:

  • Over the age of 18;
  • Not a party to the deed; and
  • Do not have a personal interest in the provisions of the document.

To be safe, it is still worth considering an independent witness, but with the current Covid-19 crisis, obtaining an independent witness is not advisable, given that the witness would need to be physically present.

Considerations and guidance

There still remains some uncertainty about the use of e-signatures, however companies will need to take into account the necessity of using an e-signature and whether the validity of using e-signatures on documents, in particular:

  • Do the terms of the agreement itself allow for e-signatures?
  • Are there any limitations in law of the place of incorporation on the parties?
  • What is the governing law of the document?
  • Are there restrictions in the law of the place of enforcement?
  • What is acceptable under the constitutional documents of a company?

All execution formalities need to be complied with and it is important to check for any limitations in using e-signatures.
It is useful to make a record all discussions and agreements on how, when and by whom the e-signatures will be carried out between the parties. Another important consideration is to ensure that the form of e-signature is established, in order to avoid any conflicts or confusion which may arise following execution of any deeds or documents. 

Obtaining local legal advice for any jurisdictional matters is also advisable as there may be prohibitions on the use of e-signatures.

Where companies decide to adopt e-signature platforms, they will need to ensure the correct internal risk policies are also adopted. It will also be useful to establish whether all parties have access to an adequate signing platform, including all security features to carry out the e-signatures.

Always consider whether e-signatures are necessary and where an alternative is possible, i.e. a scanned copy of a “wet ink” signature, this is should be used.

If you would like any more information in relation to this article then please feel free to contact either David Stancliffe ( profile ) at email: david.stancliffe@bowlinglaw.co.uk or contact Kimberley Teape ( profile ) at email: kimberley.teape@bowlinglaw.co.uk – our main contact telephone number is: 020 8221 8000.

Website content note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

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