E-signatures - has the law caught up with the technology yet?

Whether typewritten, scanned or digital, fingerprints, retina scans or electronic handwritten signatures there have long been questions over how legally binding e-signatures really are.

 

The technology

Regulation EU/910/2014 on electronic identification and trust services governs the use of e-signatures and trust services in commercial arrangements and categorises e-signatures according to their level of sophistication for authentication and integrity.

  1. “simple”, meaning data in electronic form such as scanned signatures or tick boxes with declarations;

  2. “advanced”, meaning signatures that are uniquely linked to an identifiable signatory with sole control of the data used to create it (such as through private encryption); and

  3. “qualified”, meaning those signatures that meet the “advanced” criteria and are supported by a formal certificate issued by a trust service provider.

Trust services can be used to verify the authenticity of an e-signature. A number of providers offer this service and a list can be found here: https://webgate.ec.europa.eu/tl-browser/#/ These might include electronic time stamping or seals, or website authentication.

 

The law

Contracts (particularly those for commercial matters) can be made orally or in writing (hard copy, email or text message). Currently English law supports the use of e-signatures (all three levels) equally with ‘wet-ink’ or ‘hard copy’.

Deeds, however, must be in writing and there is no need for consideration (i.e. when someone pays in some form in return for something) to be legally binding. Land conveyancing or the release of debt, for example, often use deeds. The signing of deeds is more complicated than with contracts, however. First, the Companies Act 2006 states that one director may sign in the presence of a witness or two authorised signatories may sign, on behalf of a company. Second, a company’s articles of association need to make specific provision for the use of electronic signatures. Finally, in the case of a deed, the witness who attests the signature must have actual sight of the live signing (whether electronic or ink).

 

In conclusion

There is no denying that e-signatures make things faster and save money on hard copies - as well as presenting environmental savings. However, consideration needs to be given to the type of agreement and the ways in which your company works. As with all matters it is best to seek legal advice when drafting contracts to ensure your company, and your customers, as protected adequately.