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Coronavirus | Digitally signing documents and contracts

Despite the nationwide lockdown beginning to show signs of easing, face-to-face meetings still seem a long way off for most businesses. With 44% of working adults in the UK currently working from home, what does this mean if you need to get commercial contracts signed?

The legalities of documents being signed digitally

The Law Commission recently addressed this issue by publishing a report outlining the legalities of documents being signed digitally. As technology advances and home working is likely to become the ‘new normal’ in many cases, we can all expect to see the e-signing of documents used on a regular basis. But where does this leave your business legally?

Unless the law states otherwise, a simple contract need take no particular form. Such contracts do not even need to be in writing and can be conducted orally as long as they meet the legal requirements of a contract – that is that they demonstrate offer and acceptance, consideration, the certainty of terms and an intention to be legally bound. Therefore, such contracts can be executed authentically by way of signing digitally.

However, the law requires certain contracts to be signed in writing, such as guarantees, contracts for the sale of land or the transfer of registered securities, amongst others. Case law has established that a digital signature may be held to be valid for such contracts provided that it can be demonstrated that the e-signature was intended to authenticate the contract. This can usually be adequately verified provided that the signature is inserted in the correct place.

Minimising the risks of fraud

It is also important to minimise the risk of a document being e-signed fraudulently and so the method of signing itself should be considered. The law does not rule out a party merely typing their name in the required space or copying and pasting a jpeg of their signature into a document, however, both of these methods are easily corruptible. It is therefore advisable wherever possible to use recognised e-signing software (such as DocuSign) or, alternatively, advising the signatory to print off the document and sign a hard copy in wet ink before creating a scan of the signed document.

Witnessing the signing of signatures

The same laws apply in respect of contracts where any signing must be witnessed. However, in these circumstances, there is an extra element for consideration concerning how the witnessing should take place. A valid witness must be someone who is unconnected with the transaction in question, who is over 18 and who is not a family member of the signatory. Given the current situation, this can become problematic.

Whilst witnessing can be carried out via video link, the burden falls on the signee to demonstrate that this witnessing was conducted properly. Indeed, the report by the Law Commission as linked above dictates that best practice is still for witnessing to take place in person. If either the witness or the signatory are shielding or isolating, often the easiest solution to this where a face-to-face meeting is not possible is for the witnessing in question to take place through a window. Even if you are having a socially distanced meeting, you should look to complete the process outdoors to meet current guidance.

Ultimately, where there is any doubt in how a document can be validly executed, it is crucial to seek advice from your legal advisors. If it is determined that a legal document has not sufficiently met the signing requirements, this could result in the terms of the document becoming unenforceable.

If you require any further advice in respect of e-signing and commercial contracts, please contact our corporate department who are experienced in all aspects of corporate law.

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