The impact of Covid-19
As of Monday morning (23 March), there were 5,683 confirmed cases of Covid-19 or Coronavirus in the UK. Social distancing and other measures imposed by the government have had a significant impact on every aspect of life, including business. Businesses up and down the country are grappling with previously unforeseen and uncontemplated issues, as they try to do their bit to manage the outbreak, whilst continuing to function, trade and enter into agreements.
One step businesses may consider is the ability to execute documents electronically, to mitigate the risk of spreading the virus. In this article, we take a look at the legal status of electronic signatures in the UK.
The Law Commissions 2019 report on the execution of documents, which has been endorsed by the UK government in a Ministerial Statement on 03 March 2020, states that:
An electronic signature is capable in 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.
Therefore, if the intention is to sign electronically and any statutory formalities are complied with, a document can be validly executed by electronic signature.
Intention to authenticate
The key here is for parties to be able to demonstrate intention to authenticate the document by electronic signature. This will require some level of due diligence from each of the parties into the intention and authenticity of the electronic signature.
In the context of a commercial agreement, a practical solution to this would be to insert a specific clause, acknowledging electronic signatures as valid execution. This will demonstrate the intention of the parties to create legally binding relations and to execute electronically, which is the key to valid execution.
Before executing electronically, it is important to consider the statutory formalities for that particular document.
For example, if the document needs to be executed as a deed, section 1 of the Law of the Law of Property (Miscellaneous Provisions) Act 1989, dictates that it must be signed, in the presence of a witness, who attests to the signature.
Therefore, if a document is to be executed as a deed, the parties would need to take steps to ensure that a witness is physically present (where safe to do so) in the same location as the signatory to attest the electronic signature.
How can an electronic signature be used?
Subject to any rulings from UK courts, valid electronic signatures could include a person:
- typing their name into a contract or email that includes the agreement’s terms;
- electronically pasting their signature, e.g. a jpg or .png image onto an electronic version of the agreement
- using a finger or e-pen on a touchscreen to write their name electronically; or
- accessing the agreement through an online platform designed to assist in electronic signatures. E.g. docusign.
Here at Berry Smith, we advise businesses on their commercial arrangements on a daily basis.
If you need advice on any commercial agreements or assistance with drafting them, please contact Abbie Anthony on AAnthony@berrysmith.com or call 029 2034 5511 and ask for the Commercial team.