In our technology-empowered world, consumers and businesses need to rely on modern methods for entering into binding contracts and transactions. In strange times such as these, electronic signatures can be key in keeping your business operating by allowing you to complete transactions legally without having to meet the other party in person or leaving your home.
In this article, we will briefly look at practical considerations that you may need to take into account when resorting to electronic signatures.
Are electronic signatures valid in commercial contracts?
The short answer is “yes.” The longer answer would be “it depends.” On 3 March 2020, the Government endorsed the Law Commission’s report on electronic execution of documents and made it clear that businesses and individuals should feel confident in using e-signatures in commercial transactions.
Keep in mind that, where a document is governed by the laws of another country – and not English law – the decision as to whether an electronic signature is acceptable should be decided in accordance with the laws of that jurisdiction.
What about deeds?
While the use of electronic signatures is generally permitted for simple contracts, the rules are slightly more complex for deeds. A deed most often presents itself as a legal document that transfers or confirms an interest or a right.
It should be “delivered” – not just signed – which in practical terms means that you need to have an independent witness co-signing it with you. For example, your shareholders’ agreement or employment agreement may be prepared as a deed and should be co-signed by a witness.
Unlike the simple contracts mentioned above, a third-party witness must be physically present when a deed is being signed. As a general rule, the witness has to be an independent party. However, in times such as these, if a family member is the only witness possible, their signature will still be deemed legal.
Currently, video witnessing is not considered a legally legitimate method to attest an electronic signature but this is being re-considered as we write. Until then, a deed should always be co-signed by an independent witness who is physically present in order to be correctly executed.
It goes without saying that all legal documents differ and have their own legal procedures. Electronic signatures are a relatively new legal territory and the legalities are not always clear-cut. Contact us to discuss your specific situation or if you would like us to check whether an electronic signature is appropriate in your case.