Electronic signatures can be written into the law

SIGNING on the dotted line has been the seal on deals and contracts for hundreds of years. But the supremacy of the traditional written signature could be nearing its end as the Law Commission has ruled that it can be replaced with a typed name or even the click of a button.

The Government’s independent legal adviser has released a report stating that e-signatures can be treated as equivalent to written ones. The report could have implications for documents including Lasting Powers of Attorney, which must be signed manually, as well as credit agreements and land sales.

Currently many businesses are afraid to use e-signatures because they are concerned they could be challenged in court.

In one case, the commission said, a large organisation has its documents signed manually before scanning them and then shredding the originals, a practice it described as “inefficient”. Electronic signatures can take forms including a typed name, clicking on “I accept” on a website, using a finger or stylus to sign on a touchscreen and using a password or Pin code.

The guidance raises the prospect that an email with a name typed at the

‘An electronic signature is capable of meeting a statutory requirement for a signature’

bottom of it or even an email header could be treated as a signed document.

The commission has opened a consultation on whether a new law is required to enshrine the legal validity of e-signatures, but said it is “not persuaded at present” that this is necessary in England and Wales, because the law is already in force. “Our provisional view is that the combination of EU law, statute and case law means that, under the current law, an electronic signature is capable of meeting a statutory requirement for a signature if an authenticating intention can be demonstrated,” it said.

It said recent rulings made in the High Court and the Court of Appeal set enough of a precedent for there to be no need for a new law. European law also says that e-signatures should not be treated as less effective than physical ones.

The commission also suggested that, in future, signing could be witnessed via webcam or Skype, something the law does not currently allow for.

“We provisionally propose that it should be possible for a witness to observe an electronic signature by video link and then attest the document by affixing their own electronic signature to it,” the commission said.

In the future, it said, the law could even allow a second person to virtually witness an e-signature by signing into an online platform so they can see it appear in real time.

Stephen Lewis, the law commissioner, said: “Contract law in the UK is flexible, but some businesses are still unsure if electronic signatures would satisfy legal requirements. We can confirm that they do, potentially paving the way for much quicker transactions for businesses and consumers.

“And not only that: there’s scope, with our proposals for webcam witnesses, to do even more to make signing formal documents more convenient, speed up transactions and get business booming.”