A recent Note issued by a joint working party of the Law
Society1 and the City of London Law Society has done
much to increase confidence in the validity of electronic (or
"e"-) signatures. A short explanation of the position
under English law and a minor word of warning may assist.
Most contracts can be made electronically, for example by e-mail
or web-site trading, but uncertainty can arise where English law
requires some additional formality for a contract or instrument,
including that it be "signed".
The EU has re-visited the issue in the eIDAS
regulation2 which covers the effectiveness of
e-signatures and distinguishes between different forms of
e-signature. "Qualified electronic signatures", which are
an advanced form of electronic signature created by a qualified
electronic creation device, are given equivalent legal effect to a
handwritten signature. Such a signature, based on a qualified
certificate issued in one Member State, is to be recognised in
other Member States. However a mere "electronic
signature" is not to be denied legal effect and admissibility
as evidence in legal proceedings solely on the grounds that it is
in electronic form, or does not meet the requirements for a
qualified electronic signature. Moreover (other than in the case of
qualified electronic signature) it is for the courts of each Member
State to determine what legal effect an electronic signature
Qualified electronic signatures have, in fact, rarely been
encountered in English practice to date, and the Note relies
largely on existing (but amended) English legislation and, in
relation to the validity of e-signatures, on the English common law
rather than on the eIDAS regulation.
In short, the Note suggests (it does not constitute legal
advice) that an e-signature may satisfy English law requirements
for certain contracts to be in "writing", for
"signature" or for a document to be "under
hand", and that an instrument executed by e-signature may be a
deed, meaning that it is capable of meeting any requirement for
attestation (witnessing) of that signature, and for delivery of the
deed. It concludes that the English courts will accept a document
bearing an e-signature as prima facie evidence that the
document is authentic, which is the same evidential weight as is
given to a wet-ink signature – after all, even a wet-ink
signature can be forged. While the Note only addresses commercial
contracts, its conclusions should in most cases also apply to
To this welcome reassurance (and relative consensus among the
legal community) we add three comments:
First, there are still occasions when
a wet-ink signature on a paper document is required. In particular
this is required by the Land Registry and, at least when stamp duty
is payable on the document, by HMRC.
Second, while the Note provides
strong support for the use of e-signatures under English law,
bullet-proofing this against a possible challenge that there has
been some irregularity may dictate that additional safeguards are
taken (although the same point could be made about wet-ink
signatures). The effectiveness of e-signatures under other laws or
when execution is by a foreign company may, however, still need to
be checked under applicable law.
Third, and following from the last
point, it is worth noting that a number of products have been
launched offering e-signature solutions allowing signatures to be
effected "remotely", for example by use of a mobile
phone. This could potentially solve many a last-minute panic when a
crucial signatory is "travelling", and provide assurance
about who has actually executed the document by generating a
digital audit trail, although of course the Note does not endorse
any particular provider or platform.
1 Note on the Execution of a Document Using an
Electronic Signature issued by a joint working group of the Law
Society Company Law Committee and the City of London Law Society
Company Law and Financial Law Committees, and approved by Mark
2 Regulation (EU) No 910/2014 having direct effect in
EU Member States from 1 July 2016
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
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