As technology has developed, so have the different methods to establish a legal relationship by electronic means. The introduction of electronic signatures (e-signatures) using a cryptographic system has been a breakthrough, particularly during the Covid-19 pandemic. However, there has been confusion as to whether the formality requirements for deeds can be satisfied by wholly electronic means.
Several legal transactions require the execution of a deed to be effective, these include the transfer of physical property or the grant of a lease. Strict formalities must be observed to create a valid deed. It must be
- in writing
- clear that it is intended to take effect as a deed
- validly executed as a deed
- delivered to the other party.
A Law Commission’s report confirmed that e-signatures could be used to execute most legal documents and deeds. This is provided that the person signing the document intends to authenticate the document and any formalities relating to the execution of that document, such as having the signature witnessed.
Witnessing e-signatures is not without its complications as the counterparty could argue that it does not meet the strict formalities or that another party fraudulently signed it.
One of the best solutions is to use a secure cloud-based cryptographic platform such as Adobe Sign or Docusign. These platforms generate an audit trail which records who signs the document and takes additional steps to authenticate the signatory. Once the document is signed it is sent to the parties in secure PDF format to prevent alteration. Companies are increasingly implementing cryptographic platforms to sign documents, particularly in the wake of the Covid-19 pandemic.
Although cryptographic platforms may be useful during lockdown, they don’t provide a ‘silver bullet’ solution as remote witnessing of deeds is not acceptable. Under current law the person providing the electronic signature and the witness need to be in each other’s physical presence for the deed to be properly executed. Given the current lockdown restrictions this may be difficult unless you have an ‘independent’ witness in your household or support bubble.
Whilst the Law Commission considers that the current law already provides for electronic signatures, the government should consider codifying the law on electronic signatures to improve accessibility so that a court can accept the use of electronic signatures going forward. Although the current circumstances may pave the way for a swift change in the law, we are not there yet.
This article was co-written by Tom Marshall, commercial property lawyer and Nazmin Chowdhury, trainee.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.