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30 Mar 2020

Signing documents during the COVID-19 pandemic

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Social distancing measures implemented to tackle the COVID-19 pandemic have made the signing of documents a more difficult process almost overnight, with signatories working from home and in isolation. The common methods used to execute documents are having to adapt quickly to enable signings to continue in the face of a number of technical and practical issues. 

Which execution options remain available and are electronic signatures the answer?

In this alert we answer some common concerns and highlight practical issues to consider.

Summary of key points:

  • A number of methods are available for signings to continue during the Covid-19 pandemic
  • Electronic signatures are valid under English law
  • Remote witnessing methods, e.g. over Skype, should not be used
  • It is not always appropriate for a document to be executed solely electronically
  • Practical issues must be addressed before agreeing on a signing method
  • Some registries and regulatory bodies are beginning to relax their filing requirements

 

Which signing methods are available during the Covid-19 pandemic?

Traditional face-to-face signing meetings should no longer be held. There can also be practical problems when using common signing processes which require the printing and scanning of signature pages, if a signatory does not have the correct equipment at home. Despite these problems there are a number of alternative options available, including:

  • Mercury-compliant signings, using scanned or photographed signature pages: these methods follow the February 2010 guidance issued by The Law Society of England & Wales and The City of London Law Society entitled "Note on execution of documents at a virtual signing or closing". The guidance sets out a non-exhaustive range of options available to facilitate virtual signings, each involving the printing, physical signing and then transmission of scanned signature pages by email. These methods can continue as long as the signatory has access to a printer (and paper) to print the signature pages. The guidance refers to the use of a scanner to capture a PDF image of the signed signature page. However, not all signatories will have access to a scanner at home. In our view, although not covered in the guidance, the signatory can use a mobile phone or camera to photograph the signed signature pages, with the photograph attached to an email in accordance with the relevant Mercury-compliant option being used.

  • Electronic signatures - simple electronic signatures: signing the document by way of a typed signature, stylus pen or inserting an image of a signature (or similar variations). However, as discussed below, there are a number of issues to consider when deciding whether it is appropriate for a document to be executed solely in electronic form.

  • Electronic signatures - encrypted electronic signature applied through an e-signature platform: proprietary e-signature platforms, such as DocuSign, can facilitate the use of a digitally-applied signature with digital encryption technology taking place behind the scenes. As with simple electronic signatures (and as discussed below) an assessment must be made about whether the document should be executed solely in electronic form. For any electronic signature, questions of IT security should also be considered.

  • Powers of attorney: appointing an attorney under a power of attorney to execute the document on a party's behalf. However, this may not overcome all practical problems because the power of attorney itself must be executed as a deed.

  • Wet-ink signatures on paper documents: provided that the UK does not go into full “lock-down” mode and, of course, assuming that social distancing and other current government guidance can be adhered to, physical copies could be circulated to signatories by courier or postal services when absolutely necessary.

Are electronic signatures valid under English Law?

The short answer is yes, noting that consideration must be given to whether the use of an electronic signature is appropriate for a particular document on a case-by-case basis.

  • Simple contracts: Simple contracts either with or without formality requirements under statute or otherwise (e.g. a need to be in writing and/or signed and/or under hand) can be concluded with an electronic signature. Some simple contracts which do not have formality requirements, do not legally require a signature at all, although for evidential purposes this is always desirable.

  • Deeds: In our view, deeds can be executed with electronic signatures. Any witness must be physically present to see the application of a signatory’s signature. The witness can attest to observing the signing on the document with an electronic signature.

  • Other documents: There are other categories of documents beyond simple contracts and deeds which may require a signature. Whether this can be electronic must be considered on a case-by-case basis.

The Law Commission in their 2019 Report on the Electronic Execution of Documents set out their view that an electronic signature is capable in law of being used to execute a document (including a deed) provided that: (i) the person signing the document intends to authenticate the document; and (ii) any formalities relating to execution of that document are satisfied. Even though there is not any direct case law on signatures in this context, the Law Commission believe that as it is clear that signatures created electronically will suffice in other statutory contexts, it is likely that an electronic signature is also capable of satisfying the requirement for signature in relation to a deed.

Due to the practical and technical issues involved in the electronic execution of documents, the Law Commission also recommended that the Government convenes an industry working group with multi-disciplinary membership to consider these issues. The Government confirmed in March 2020 that it agreed with the 2019 Report and accepted the recommendation to set up the industry working group, without committing to any time frame.

Is it possible to witness the signing of a document remotely (e.g. over Skype)?

This is not advisable and we take the view that “remote” witnessing methods (e.g. over Skype) should not be used at present. The witness and signatory need to be physically present together, with the witness watching the signatory apply their electronic signature.

In their 2019 Report, the Law Commission concluded that parties could not be confident that the current law would allow for remote witnessing and suggested the Government consider enabling legislation, after consideration of the issue by the industry working group mentioned above. In addition, the First-tier Tribunal (Property Chamber) in a recent case where a solicitor witnessed the signing of a document over Skype, held that the law on what constitutes signing a deed “in the presence of a witness” is unclear. Given the uncertainty of the current law, the applicant had a realistic prospect of persuading a court or tribunal that physical presence was required.

Is it always appropriate for a document to be executed solely electronically?

No. Thought must be given to whether it is appropriate for a document to exist in electronic form alone. The following are some of the most common reasons for requiring a wet-ink original to be in existence:

  • The requirements of a registry or regulatory body: Some registries and regulatory bodies require documents bearing “wet-ink” signatures to be filed with them. Some are, however, relaxing their requirements in light of current circumstances. For example, HMRC has announced that it is putting in place temporary measures for some filings.

  • Cross-border enforcement: The location of the parties or their assets may require the enforcement or admissibility in court of a document in a jurisdiction outside England. The acceptance of electronic signatures varies across the world and this must be considered in each case.

  • Local law formality requirements:

    • The document may require notarisation, apostilling or other similar local law formality requirement on a wet-ink original;

    • One of the parties may be signing in accordance with local law requirements where that local law does not recognise or permit electronic signatures, or a company seal which needs to be physically applied to the document may have to be used.
  • Location of signing: The location of execution of the document may be important, for example for tax reasons.

  • English law formalities: Additional specific legal formalities may apply to a particular type of document under statute, common law or other regulatory requirements.

  • Signatory restrictions: A party could have restrictions in its constitution as to the electronic signing of documents, although this is not common in England.

Consider practical issues before adopting a signing method

There are a number of practical issues which need to be considered and addressed before parties agree on a particular signing method. We highlight some below:

  • Access to equipment: Confirm whether signatories have access to a working printer, paper and scanner or other image capturing device e.g. mobile phone camera.

  • Access to an e-signature platform e.g. DocuSign: Does one of the parties or their lawyers have access to an e-signature platform such as DocuSign? All parties and lawyers must be confident that the platform being proposed is secure and should have considered any other IT security issues raised by the use of such platforms.

  • Access to a witness: As discussed above, if a signatory will need their signature witnessed do they have access to someone who can act as a witness? At present, this poses more difficulties than normal, with the need for isolation and social distancing rules to be observed. In normal circumstances independent witnesses are preferred for evidential reasons. However, currently only family or household members will be available to act as witnesses. While this is not ideal, this would be acceptable from a legal perspective, so long as they are not also a party to the document.

  • Authority: When parties are signing a document, the relevant signatories applying the parties’ signatures need legal authority to do so. For example, when a party to a deed is an English company, the authorised signatory/ies should apply their signature personally and should not be delegating this task to someone else (e.g. a personal assistant).

  • IT security: Security considerations need to be considered by each party on a case-by-case basis. E-signature platforms using encrypted technology offer higher levels of security than the circulation of execution versions and signed documents by email.

Understandably, parties are grappling to address the legal and other issues presented by the current unprecedented circumstances. Therefore, to finish on a practical note, it is more important than ever to allow sufficient time for appropriate arrangements to be made for a document to be signed, whichever method the parties choose to use.

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KEY CONTACT

Joanne Wallace

Joanne Wallace
Knowledge development lawyer

T:  +44 20 7809 2129 M:  Email Joanne | Vcard Office:  London

Catherine Clarke

Catherine Clarke
Brexit and central KM professional support lawyer

T:  +44 20 7809 2106 M:  +44 78 0153 1606 Email Catherine | Vcard Office:  London

Charlotte Drake

Charlotte Drake
Professional support lawyer and senior associate

T:  +44 20 7809 2583 M:  Email Charlotte | Vcard Office:  London

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