Signing on the dotted line may soon be consigned to history
MOBILE technology has become a normal part of life and, undoubtedly, e-commerce is growing and there are now more mobile devices on the planet than there are toothbrushes.
Technology is readily available, allowing a person to electronically “sign” a document. The question is does an electronically signed document satisfy the requirement for a property document to be “in writing” and “signed”? First we have to ask: what is a signature?
A signature is the manuscript addition of the party’s name to a document to indicate agreement to, and willingness to be bound by its terms. Electronic signatures come in many forms, including:
Scanned signature – a manuscript signature is scanned and transformed into digital format, which can then be attached to an electronic document;
Biodynamic version of a manuscript signature – a special pen and pad is used to measure and record the actions of the person as they sign. A digital version of the manuscript signature is then created and can then be attached to electronic documents;
A digital signature using cryptography (using a key pair – private and public key). The sender affixes the signature using their private key and the recipient checks the signature with the public key;
The “clicking” of a button, like the ‘I accept’ button used when buying goods or services on-line.
To achieve a comparable level of certainty to a manuscript signature, an electronic signature needs to be: unique to the signatory; capable of identifying the signatory; created under the signatory’s sole control; and capable of being linked to the document or data so that any subsequent changes are detectable.
Clearly, it is important that a reputable form of electronic signature is used.
The Electronic Communications Act 2000 permits contracts to be concluded by electronic means and provides for the admissibility of electronic signatures in legal proceedings. This means that a person can validly “sign” a document without the need for a “wet ink” signature.
A Law Commission paper published in 2001 concluded that the requirements for a contract to be in writing and/or signed can be fulfilled via electronic means.
The test for whether signature requirements are met is whether the conduct of the signatory indicates an authenticating intention to a reasonable person ( i.e. is there clear evidence that the party signing the contract intended to agree to the terms of the contract).
Further, recent case law suggests that the courts will uphold the use of electronic signature. They will consider whether the method of signature used fulfils the function, rather than one which was commonly recognised.
So, provided the other elements of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 are satisfied (in particular the need for all the terms of the contract to be incorporated in the document) it would appear that property contracts can be signed electronically.Deeds, the Land Registry and the future of electronic signatures
The above comments purely relate to contracts as opposed to deeds. The position is presently unclear as to whether a deed can be validly executed using an electronic signature. Accordingly, best practice in relation to deeds is to assume that an electronic signature will not be valid. Caution also needs to be exercised where a document requires registration at the Land Registry.
Currently, the Land Registry does not accept electronically signed documents for registration. Whilst to date there has been a relatively low use of electronic signatures in property transactions,it seems likely to increase in the future.
Katy Barker is Associate Lawyer at Penningtons Manches LLP