The Law Society has released a new practice note on electronic signatures with the aim of increasing confidence in the use of electronic signatures for commercial contracts. It should be noted that the note is only applicable in England.
Released on 25 July 2016 and approved by a senior barrister the note clearly sets out the relevant law around the use of electronic signatures on commercial contracts. It does not limit itself to one specific type of electronic signature and covers signatures by adding a picture of a signature, use of e-signing software and other methods.
Generally, contracts do not need to be in writing and as such electronic signatures should not pose a problem. Agent’s terms of business are therefore perfectly suitable for signing by electronic means.
Tenancy agreements are not considered ordinary contracts because they involve the transfer of land or property so they are subject to limits imposed by statute. However, current legal views are that a contract executed using an electronic signature satisfies the statutory requirement to be in writing and signed for several reasons including:
1. “Writing: The Interpretation Act 1978 defines ‘writing’ to include ‘typing, printing, lithography, photography and other modes of representing or reproducing words in a visible form’. Where the contract is represented on a screen (including a desktop, laptop, tablet or smartphone) in a manner which enables a person to read its terms properly, it will be ‘in writing’ at that point.
2. Signature: Provided that the signatory inserts an electronic signature into the appropriate place in a document with the intention of authenticating the document, a statutory requirement for that document to be signed will be satisfied.”
The note also addresses Deeds and electronic signatures. In a nutshell Deeds can be signed in electronic form by a suitable signatory in the presence of another individual who must genuinely observe the signing. When the witness signs the witness section, in electronic form or writing, then that Deed will have been validly executed.
If the validity of an electronic signature is questioned, legal opinion is that an English court would accept the document bearing the electronic signature as prima facie evidence that the document was authentic and, unless the opponent adduced some evidence to the contrary, that would be sufficient to deal with the challenge. The burden of proof is thus on the party questioning the validity of the signature.
It should be noted, however that Tenancy Deposit Prescribed Information requires a signature by the landlord certifying that the information is true to the best of his knowledge and belief. It is not clear that an electronic signature would satisfy that requirement.
This practice note will encourage those agents who are, or are considering, using electronic signatures. There is a risk associated with tenancy deposit protection information but the Government is looking at confirming the status of electronic signatures in these cases as well.