Following our blog back in September 2018 on the Law Commission Consultation (available here), the Law Commission has now issued its report on the electronic execution of documents.
The report confirms that current laws permit electronic signatures, but that the law is not very accessible to non-lawyers and businesses. The aim of the report is to clarify concerns as to whether electronic signatures are admissible and to ensure that the law governing this area is sufficiently certain. The Law Commission has set out an option for reform – that the Government may wish to consider codifying the law on electronic signatures in order to improve the accessibility of the law.
It is important to note that this report excludes two categories: 1) documents that are to be registered at the Land Registry; and 2) wills. The issue of whether electronic signatures can be used in these two instances is being considered separately.
The report affects England and Wales only.
Key Conclusions
1. The Law Commission report confirms that an electronic signature can be used to execute a document (including a deed) provided that the person signing the document intends to authenticate the document and that they comply with any execution formalities. The Commission’s view is based upon legislation and court decisions which relate to both non-electronic and electronic signatures.
2. An electronic signature is admissible in legal proceedings.
3. In terms of executing deeds in the presence of a witness, the physical presence of that witness is still required even where both the person executing and the person witnessing are both doing so electronically.
The Law Commission concluded that parties could not be confident that the current law allows for “remote” witnessing (where the witness is not physically present when the signatory signs the deed). The Law Commission considered two potential options to address this issue:
a. Witnessing by video link and witnessing through a signature platform; or
b. The use of digital signatures or other form of technology to replace witnessing.
Next Steps
The report recommends that:
1. An industry working group be set up to produce guidance for the use of electronic signatures in different commercial transactions;
2. The industry working group consider practical issues concerning the electronic execution of documents, provide solutions to the practical and technical obstacles for video witnessing of electronic signatures on deeds, and provide for legislative reform to overcome these obstacles if required; and
3. There should be a future review of the law of deeds and consideration as to whether the current requirements for executing a document as a deed are still relevant today.