Digital Signatures and Service: A Roundup
Is there anything that cannot be signed or, indeed, executed electronically in these pandemic days? Even the execution of Wills, which until recent months still required the testator’s and witnesses’ physical presence for valid witnessing, has been relaxed (albeit temporarily and with strict conditions).
Unsurprisingly, there are now few exceptions to the general rule that documents and deeds can be signed and proceedings served electronically. We look at the key developments that have transformed the business environment over the last year or more:
Property transfers – Transfers of land and property, along with leases and mortgages, can now be signed and witnessed electronically, and will be accepted by HM Land Registry for registration. This development represents the removal of the last strict requirement to print and sign a paper document in a property transaction. However, bear in mind this does not extend to all documents which must be registered with HMRC and HMLR, so care must be taken.
Smart contracts – Just weeks before the pandemic hit, the then chancellor of the High Court Geoffrey Vos confirmed that smart (blockchain-based) contracts are now legally enforceable in England and Wales. It could be a gamechanger in contract law but it will take some years before smart contracts become what could be a transformative fixture in areas such as conveyancing,
Digital signatures – As confirmed by the Law Commission in Autumn 2019, most legal deeds and documents can legally be digitally signed – so long as there is a demonstrable intention to give legal authorisation by way of that signature.
HM Revenue & Customs – Because of covid-19, HMRC is temporarily allowing share transfer documents to be electronically signed.
Service of documents – The courts are increasingly permitting the service of proceedings, notices and other court papers via social media. As well as via Facebook and Twitter, other examples include service via WhatsApp; service of amended particulars of claim via a website contact form; and service via email - but not if served on a solicitor who had not confirmed it would accept service.
Taking a different perspective from ‘what is allowed’, it’s worth noting the court’s stance in a 2019 ruling1 where the court agreed to dispense with service in circumstances where the claimant had tried numerous times to effect service, including via Facebook, Flickr and the internet.
What are the risks of digital e-signing?
Hacking is an ever-present risk where a digital transaction is involved. There could be cases where a contract is digitally concluded, but one party alleged that the contract was signed fraudulently and not by themselves personally. It is important for the parties to have a discussion confirming their intention to digitally sign a document prior to it taking place to minimise any risk of this occurring.
The parties must make sure, particularly in the case of a corporate transaction, that digital signatures and or execution of deeds are permissible under their articles of association – and that the person signing has authority to do so.
Where digital signing and execution are employed, it is important that contemporaneous notes are taken recording the circumstance around the transaction and the signing to avoid any risk of a dispute. For instance, one party could try to argue they had no intention of creating a legally binding contract.
It is also wise to ensure a paper version of the electronically signed document is circulated to all parties to the contract.
1Lonestar Communications Corp LLC v Kaye[2019] EWHC 200
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