With coronavirus and COVID-19 leading to increasing numbers of people working remotely, organisations will need to think about how documents and contracts can be signed and concluded. While some projects will slow or stall, many routine contracts will be up for renewal in the next few months, and other transactions will be due to complete. The logistics of signing in wet ink may become impractical, with signatories dispersed around the country, with limited access to printing, scanning and post.
Signing electronically can eliminate many of these issues, and allow all parties to sign a document within seconds of being invited to do so. However, to date, many organisations have been reluctant to embrace electronic signatures, as they are unsure of the law and the potential risks.
When can you use electronic signatures?
A signature is simply a way of providing evidence that a person agreed to be bound by the terms of a document or contract.
Under both Scots and English law, the majority of day to day contracts can be created electronically.
The Law Commission for England and Wales last year stated that electronic signatures are valid in most cases. The Law Commission also said that it can see no reason why an English law deed cannot be authenticated electronically, though there are some practical issues when a deed is to be authenticated by way of a witnessed signature.
In Scotland, specific legislation was introduced in 2014 for the electronic authentication of certain documents that must be in writing.
How do you decide what sort of electronic signature to use?
An electronic signature can take many forms - whether using a tick box on web page, sending an email or using some form of secure electronic signature.
When deciding how to sign (or authenticate) electronically, it is essential that a system is used that provides a reasonable level of assurance that the document was authenticated by the person purporting to sign it.
What is appropriate may depend on the nature of the contract or document, the risk of a challenge to the validity of the signature and the consequences of a successful challenge.
For example, simply inserting a JPEG of someone's wet ink signature into a Word document provides very little assurance.
On the other hand, an online signing platform such as Docusign or Adobe Sign collects meta data on the signing, including information around the date and time of signing, the email address to which the request to sign was sent, and the IP address of the device. These platforms can also use two factor authentication, where the signatory needs to insert a code that has been sent to a mobile number, which reduces the risk of someone with delegate inbox access signing in someone else's name.
The most secure form of electronic signature is what is known as a qualified electronic signature. A QES uses cryptography and is issued by a trusted third party. However, because the trusted third party needs to independently validate the entity of the signatory, QES have historically only been available in the UK as part of a closed loop system for a particular purpose. That is changing, and the major signing platforms are now starting to offer cloud based QES, where the trust service provider verifies the signatory's identity in advance by way of a video call.
When should you not use electronic signatures?
The primary areas where electronic signatures are not a valid means of signing are in relation to:
- missives and other documents dealing with the transfer of rights in land;
- certain types of guarantees; and
- where (under Scots law) you wish a document to have self-proving status.
Under Scots law, such documents can only be authenticated electronically where an advanced electronic signature (AES) is used or, where self proving status is required, a qualified electronic signature (QES). The standard signature functionality within platforms such as DocuSign or Adobe Sign does not meet the requirement for an AES or QES. All solicitors registered with the Law Society of Scotland have a QES on their Law Society smartcard, but to date use remains low.
There may also be issues where a document needs to be lodged with a registry or relied upon in another jurisdiction. If in doubt, get legal advice on any potential issues.
Law Society of Scotland Guide on Electronic Signatures
To assist solicitors and organisations looking to sign Scots law documents electronically during the Covid-19 emergency, the Law Society of Scotland's Working Group on Electronic Signatures has published a draft guide. The guide provides Scottish solicitors with a detailed guide to Scots law together with suggestions on good practice. The draft guide has been prepared with input from leading signing platforms. A final version of the guide is expected to be published later this year.
You can access the guide on the Law Society of Scotland website.
Electronic signatures checklist
When looking to use electronic signatures, the following checklist can help:
- Is there any reason that an electronic signature may not be valid for the document you wish to sign?
- Do you need to use a particular form of electronic signature, such as an advanced electronic signature or qualified electronic signature, in order for the signature to be valid?
- If signing electronically, which signing system will you use? If you plan to use a signing platform, are you using additional security features, such as two factor authentication?
- When using a signing platform such as Docusign or Adobe Sign, one party coordinates signing and issues invitations to the other signatories. Who will do that? If lawyers are involved in the transaction, which firm will take the lead? Agree protocols and procedures in advance.
- Do you need to include any information in your contract or document to state when it will take effect?
- What information will you retain to evidence the signature? Signing platforms usually provide a certificate with the information collected. If you are not coordinating signing, have you requested a copy of that?
If you have questions in relation to the law applying to electronic signatures, your organisation's use of electronic signatures or how Brodies can assist you with electronically signing documents, please get in touch with me or your usual Brodies contact.