The Law Commission published its Report on electronic execution of documents on 3 September 2019. The Report followed a consultation which had been prompted by uncertainty about whether an electronic signature fulfils a legal requirement for a signature, and increased interest in digital "smart contracts".
What is an electronic signature?
Electronic signatures take many forms, ranging from a simple tick box on a website (indicating, for example, that you consent to standard terms and conditions of use) through names typed at the foot of an email, to the use of sophisticated secure software using a PIN or passwords. The Law Commission Report is "technology neutral" in so far as it encompasses all of these (and other) "non-wet ink" methods of signing, and doesn't favour a particular type of technology.
Exclusions from the Report
Transfers of registered land and wills are both excluded from the Report. They are respectively covered by HM Land Registry's project on electronic conveyancing and a separate Law Commission project.
Are electronic signatures legal and are they admissible in court?
The Report concludes that an electronic signature is capable of being used to execute a document, provided that: (i) the person signing intends to authenticate the document; (ii) other formalities (eg: witnessing) relating to execution are satisfied; and (iii) relevant legislation, case law or contractual arrangements do not specify otherwise. The common law does not prescribe a particular type of signature and there is no statutory definition of "signed" or "signature" which applies generally.
The Report contains a useful 8 point summary of the current law on electronic signatures.
Electronic signatures are admissible evidence in legal proceedings, the Report says, to prove or disprove the identity of a signatory and/or the signatory's intention to authenticate the document. On the weight to be given to them, the Report notes that users of electronic signatures should satisfy themselves that the system or technology they adopt will have sufficient evidential weight to answer questions as to the identity of a signatory, authority of a signatory to sign and integrity of the document being signed.
A few days after the Report was published the High Court upheld a contract for sale of land which was evidenced by an automated sign off at the foot of a solicitor's email confirming the terms of settlement of a dispute. The purported signature of the solicitor on behalf of the defendant was by 'automatic' generation of his name, occupation, role and contact details at the foot of the email. This, the judge held, satisfied the requirements of the Law of Property (Miscellaneous Provisions) Act 1989, Section 2(1) of which requires a contract for the sale of land to be "in writing" and "signed by or on behalf of each party to the contract." (Note that this was the contract for sale and not the actual transfer of the land in question.) A fuller summary of the decision can be found here, and the full judgment here: Stavros Neocleous and Kalliroy Neocleous v Christine Rees  EWHC 2462 (Ch)
What if a statute provides that a signature must be witnessed?
The Report concludes that the requirement that a deed be signed "in the presence of a witness who attests the signature" doesn't preclude the use of electronic signatures, either for the person signing or for the witness, because, although a witness may not be able to see the digital information that lies behind the electronic signature, they can see on a screen the signatory purporting to add their signature to a document.
However, the requirement that a document be signed "in the presence of a witness" will only be satisfied if the witness is physically present when the deed is signed, whether electronically or by hand. This is reinforced by the requirement that the signature of the witness be affixed at the time of execution. These requirements rule out using any form of video conferencing for a witness, the Report says. It also notes that there are significant policy questions to be considered before extending the statutory provisions which require signatures to be witnessed, to permit remote or virtual witnessing.
The Report concludes that no legislation is required to facilitate wider use of electronic signatures, but notes that the Government may wish nevertheless to codify the law in order to improve accessibility to it; it suggests drafting which could be inserted into the Electronic Communications Act (ECA) 2000.
The Report recommends that the Government sets up an industry working group to look at the practical and technical issues associated with electronic execution in order to increase confidence in their use. It includes recommended terms of reference for the group: to consider how different technologies can help provide evidence of identity and intention to authenticate; to consider the security and reliability of different technologies; and to produce best practice guidance for the use of electronic signatures in commercial transactions and by individuals. The industry group terms of reference should also include looking at potential solutions to the obstacles to video witnessing of electronic signatures and how signatories can be protected from potential fraud.
Once the working group has completed its work, the Report recommends that the Government considers amending the ECA 2000 to allow for video witnessing. Finally, it suggests that the Government asks the Law Commission to carry out a separate review of the law relating to deeds, to consider "whether the concept remains fit for purpose".