The Law Commission has confirmed that documents, including deeds, can be signed electronically.
In its recently published consultation paper, the Commission says that deeds and other documents that are executed electronically will be valid under English law, and there is no need for any change to the law to bless electronic signatures.
The Commission’s findings are welcome news and will hopefully inspire confidence among commercial organisations and advisers who would like to use electronic signing platforms to complete transactions.
Organisations such as DocuSign and Adobe Sign (previously EchoSign) have been providing electronic signature solutions for some time now.
At Macfarlanes, we are committed to electronic signing as a means of efficient transaction execution and have been making the ability to sign documents electronically available to clients where it is appropriate and they want to use it.
However, the take-up on larger-scale commercial transactions in the UK has to date been relatively low. This is due to several factors, including:
- A perceived risk that electronically signed deeds will be unenforceable because of arcane rules about the substance a deed must be written on
- Whether it is possible to witness a signature electronically, and (if so) how
- What amounts to an “original” electronic document, and what merely constitutes a copy
In our view, as well as that of the Law Commission, the Law Society and the City of London Law Society, none of these questions poses an impediment to executing documents electronically.
We are sometimes asked whether e-signing is secure, or whether there is an increased risk of fraud or breach of confidentiality associated with electronic execution. From a technical perspective, e-signing platforms generally boast their security credentials on their website and provide detailed specs on request, so a potential user can ensure that the platform’s level of security meets its expectations.
From a legal perspective, there is rarely a reason to suspect that using an e-signing platform to execute a transaction, rather than swapping physical documents by post or counterparts by email, will raise the risk of fraud. In fact, e-signing platforms incorporate a range of functions, from capturing signatories’ IP addresses and GPS co-ordinates to adding user-specific authentication, which means that, as well as being more efficient and flexible, signing documents through a trusted electronic platform can actually be safer.
There remain some obstacles to eliminate. It is still not possible to submit an electronically signed document to the Land Registry for registration (although the Registry is developing its own solution for electronic conveyancing). Likewise, HMRC will not accept an electronically signed document for stamping.
We also exercise caution where a document involves an overseas party, is governed by foreign law or may need to be brought before a foreign court, or where (for whatever reason) it is important to pin down the precise location in which a document is signed. In these cases, it may still be possible to sign electronically, but some extra analysis may be needed first.
But these considerations do not always arise and, leaving aside instances such as these, there are still plenty of transactions which could benefit from electronic signing.
The Law Commission has recommended convening an industry working group to analyse the non-legal issues that are currently inhibiting electronic signing. This can only be a positive step forward and will hopefully result in consensus over how to deploy electronic signing methods more generally.
But in our view, where parties are willing and able, there is no reason why electronic signing should not be an effective execution solution here and now.