Law Commission rules electronic signatures are valid

Article Posted -
21 Aug 2018

Key points for landlords:

  • Law Commission early conclusions in consultation find electronic signatures to be valid
  • This will impact how landlords can agree tenancies and other documentation in the future
  • The Law Commission is seeking further views on the electronic execution of documents, the deadline for submitting a consultation response is the 23rd November 2018

 

The Law Commission has ruled that electronic signatures can be used to sign formal contracts under English law.

The early conclusions, which have been published today, will sweep away current uncertainties in the law and allow businesses to speed up their transactions by shifting to fully digital formats.

Today, the Commission laid out possible steps which could further boost business and help the UK capitalise on new technologies, proposing:

  • that electronic signatures could be witnessed via a webcam or video link
  • the formation of a Government-backed industry working group to consider the on-going practical issues around the use of electronic signatures and how these can be improved.

Speaking on the ruling, Law Commissioner Stephen Lewis said:

“Contract law in the UK is flexible, but some businesses are still unsure if electronic signatures would satisfy legal requirements.

“We can confirm that they do, potentially paving the way for much quicker transactions for businesses and consumers.

“And not only that, there’s scope, with our proposals for webcam witnesses, to do even more to make signing formal documents more convenient, speed up transactions and get business booming.”

 

An environment of legal uncertainty

The EU-wide eIDAS regulation says that an electronic signature cannot be denied legal validity simply because it is electronic and that that electronic signatures are admissible in evidence in legal proceedings.

But while the Electronic Communications Act 2000, a UK statute, also contains the admissibility provision in eIDAS, it does not expressly outline the validity of electronic signatures.

This lack of clarity in the law has discouraged business from executing documents electronically, despite it being a more convenient option.

Some observers have argued that this could disproportionately affect small businesses and start-ups, which do not have the same levels of access to legal expertise as larger commercial businesses.

 

Seeking views on electronic signatures

In further steps to improve the law and bring about more clarity, the Law Commission is seeking views on its proposals:

  • the government should set up a group of industry experts to monitor the use of electronic signatures and advise on potential changes which could help businesses as new technology emerges
  • webcam or video links could be used instead of a physical witness for documents which require witnessed signatures
  • there should be a move away from traditional witnessing in person to:

-          a signing platform alone, where the signatory and witness are logged onto the same program from different locations; or

-          the ability of a person to ‘acknowledge’ that they applied an electronic signature to a witness after the event.

  • there should be a further project on whether the concept of deeds is fit for purpose in the 21st century

 

You can find the full consultation here. The deadline for responses is 23 November 2018.

 

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