Background to electronic signature of documents

As well as using conventional “wet ink” signatures on paper documents, for speed and convenience business people increasingly use documents in electronic form and an electronic means to “sign” those documents.

The Law Society and the Law Commission have dispelled the uncertainty that existed until 2019 as to the legal validity of such electronic documents, and it is now clear that documents can be created and signed using electronic means. The Government might at some stage codify the relevant law so that the relevant law becomes more accessible.

The following paragraphs explain how to validly create, execute and use certain types of documents electronically, but this does not cover those documents which are required to be registered at the Land Registry which still require a “wet ink signature”.

For fuller details, please read our Guidance Note: Electronic Signature of Deeds and Contracts which you can reach by clicking here .

Please also see our Guidance Note: Formalities for Signing Deeds and Contracts on the various means by which deeds and contracts may be executed or signed in order to ensure that they are legally enforceable. You can find it here .

We recommend that you take professional legal advice if you are uncertain about any aspect of these topics.

What are “wet ink signatures” and “electronic signatures”?

“Wet ink signature”, in relation to entering into a contract, refers to the practise of each party firstly preparing two paper copies of a document each containing all of the terms to be agreed, secondly, signing both copies using “wet ink” hand-written signatures, and, finally, adding the date. The result is two identical originals of a contract. Each party keeps one copy. Sometimes instead, each party signs one original, the other signs the other original, and they date and give their original copy to the other party (“exchange of contracts”). In each case a contract comes into existence at that point.

It is now also common practice for an “electronic signature” to be used in a range of contracts and other transactions, and this trend is likely to continue. For example, it might consist of a party’s name typed into a contract or email containing the contract terms, or a scanned image of a signature in a contract signature block, or a name inserted in a document using a web-based e-signature platform, or use of a tablet to add a name in the contract using a finger or e-pen.

The relevant law recognises that if an electronic signature is intended to render a party bound by the document in question, it has the same legal status as a wet-ink signature.

Our Guidance Note: Electronic Signature of Deeds and Contracts expands on what is meant by “electronic signatures” and how they can be used. It also explains what is meant in law by the expressions “signature”, “in writing” and “under hand”.

What about contracts that can be made orally (i.e. not in writing)?

Some types of contract will be legally valid and binding although only made orally. (These types are too numerous to list). In these cases, all that is needed is for the parties to show their intention to be legally bound.

These types of contract can alternatively be made in writing and signed. In that case the contract terms can be in electronic form, with electronic signatures included in the document: opting to put the contract in written form is then simply the parties chosen means of demonstrating that they intend to be legally bound.

What about types of document which must be in writing and/or signed to be valid?

In contrast to the above cases, certain types of contract will only be legally binding and effective if in writing and signed, e.g. a contract for the sale or other disposition of an interest in land.

However, they do not need to be on paper or signed in “wet ink”. In these cases, a document in electronic form is still in “writing” and an electronic signature is still a “signature”. Therefore, an exchange of emails can amount to a binding contract for various types of transaction. As an example, it is even possible that, in relation to a real property sale, a chain of emails between solicitors can amount to a legally binding contract.

This means that it is easy to enter into a binding contract inadvertently. You might in fact have not intended to do so because, for example, you have not yet reached agreement on all terms or have not set out all of the terms in the emails. For tips on how to avoid such an unintended consequence, please see our Guidance Note: Electronic Signature of Deeds and Contracts.

Some types of document also need not only to be in writing and “signed” but also to comply with other requirements.

Deeds – what formalities are required?

If a contract or other document is intended or legally required to be in the form of a deed, it must be in writing and executed by an individual in the presence of a witness, or if by a company it must be executed by a director in the presence of a witness or by two directors or by a director and the company secretary. To be a valid deed, a document must also state that it is intended to be a deed and that it is executed as such, and it must be “delivered”.

Some types of document must be in the form of a deed in order to be valid but sometimes the parties to a document choose to put their document in the form of a deed, although it is not legally necessary to do so for it to be valid.

Whilst deeds must be set out in writing and signed and witnessed, they will be valid if in, and executed in, electronic form unless these deeds are required to be registered at the Land Registry in which case a “wet ink signature” is still required. The signatures of those executing the deed and witnessing that signature may be in electronic form.

Further detail can be found in our two Guidance Notes referred to above.

Miscellaneous

A witness to an electronic signature can validly attest to it by adding their signature, electronic or otherwise, when the party inserts their electronic signature in the document. The current view of how this can validly occur is that a witness must be physically present: they may not, for example, use videoconferencing to remotely observe a party’s signature being added to a deed.

It is likely that where there is a legal challenge to an electronic signature on a document, it would be accepted by a court as authentic unless evidence were given to the contrary. This is the same principle that would apply to a wet-ink signature whose authenticity is challenged.

There are various cases where electronic signing may not be effective and only a wet ink signature will suffice to make the document legally valid, binding, and effective. For example, certain documents that are required to be filed with the Land Registry need wet ink signatures, as do certain documents where tax, stamp duty or cross border issues arise. There may also be other exceptions.