Digital Signatures: what’s the latest?

Digital technology has provided a huge amount of flexibility in legal practice and procedure, including the gradual acceptance of digital signatures. But to what extent are digital signatures on legal deed and documents acceptable?

It’s a year since the Law Commission launched a project looking at the uncertainties surrounding the formalities of electronic execution of legal documents. It recognised that legal and practical uncertainties, such as security and reliability of electronic signatures, were real issues. It also acknowledged the growing demand from both clients and legal professionals for an effective and acceptable method of using digital signatures on legal documents.

This culminated in a consultation document published in August 2018 (this has now closed and the responses are still being analysed).

What’s the background?

As far back as 1677, the Statute of Frauds required certain documents to be in writing and signed, and this remains in force. But, as the Law Commission notes in the consultation document, documents executed today are no longer the same as those used over 400 years ago and technological developments have changed the ways in which transactions are made - and will continue to change rapidly.

It has been told, for instance, of legal issues around the electronic execution of documents which are hindering the use of new technology, particularly where legislation requires a document to be “signed”. The Law Commission is therefore considering whether there are problems with the law around the electronic execution of documents and deeds (including deeds of trust) which are inhibiting the use of electronic documents by commercial parties and, if appropriate, consumers, particularly in relation to electronic signatures, witnessing and delivery, and the consequences of the decision in R (on the application of Mercury Tax Group Ltd) v HMRC [2008] EWHC 2721 (which relates to ‘virtual’ signings).

The Commission is also considering whether and, if so, what legislative reform or other measures are necessary. One proposal is that electronic signatures could be witnessed via a webcam or video link.

An important development is the Commission’s stated view that electronic signatures are as valid as traditional handwritten signatures, and that no formal change in the law is necessary. As for the form a valid digital signature may take, the Commission says a typed name or even a single click can give legal authorisation - if the intention to do so can be demonstrated.

What’s next?

The Law Commission’s final report is now awaited, and it will most likely be focused on digital signatures in the commercial context and, where appropriate, for consumers.

However, it is unlikely any proposals or rules will extend to the electronic execution of registered dispositions under the Land Registration Act 2002, as this is a topic of HM Land Registry’s project on electronic conveyancing and registration. Nor will it extend to wills, which are being dealt with by the Law Commission’s project, Making a will.

 

 

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