The Law Commission has confirmed that in the majority of cases the electronic execution of documents should be valid and legally binding.
We live in a digital age where businesses are becoming increasingly reliant on technology to improve efficiency and increase productivity. Not only, therefore, is technology directly influencing day-to-day business operations but it is also impacting the means by which parties are entering into commercial arrangements such as commercial property contracts.
In contractual negotiations, time is invariably of the essence so it is increasingly important to have the ability to execute and exchange ‘soft-copy’ contracts and documents whether via email or perhaps even WhatsApp.
In recognition of this issue, the Law Commission published guidance (Law Com No 386) on 3 September 2019 concerning the electronic execution of documents to reflect contemporary business practices and dispel concerns raised by some over the validity and legally binding nature of electronic signatures.
The Law Commission has advised as follows:
- An electronic signature is capable in law of being used to execute a document provided that (a) the individual signatory has an intention to authenticate the document and (b) any formalities relating to execution of the document are satisfied.
- An electronic signature is admissible in evidence in legal proceedings.
- The common law adopts a pragmatic approach and does not prescribe any particular form or type of signature.
This guidance also applies to the execution of deeds, although any deed to be signed in the presence of a witness will still require the physical presence of that witness (although the witness may also execute electronically). This is of particular importance to commercial property transactions as generally speaking a legal interest in land cannot be conveyed or created without a deed (section 52(1) of the Law of Property Act 1925).
Also, the Law Commission has further advised that signing with initials only, using a stamp, signing with an “x”, signing by the printing of a name or by adding a description of the signatory (assuming sufficiently unambiguous (such as “your loving father”)), all of which have been held to amount to valid signatures in non-electronic form, should also be held to be valid by the courts in electronic form.
If, therefore, your business needs call for the ability to execute documents expediently, the Law Commission’s recent guidance should provide you with the necessary comfort that in most instances an electronically executed document should be deemed to be legally binding.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.