The law relating to signatures goes back centuries. The Statute of Frauds of 1677 is an act of the parliament of England that requires documents to be in writing and signed. It was instituted to prevent fraud and perjured testimony at trials regarding transactions.
What makes a document legally binding?
It is often too late to worry about whether a document is legally binding when things have already gone wrong. That is why it is critical to make sure a contract is watertight when it is drawn up and not later.
The services of Net Lawman are a great help, particularly for small businesses, when it comes to creating legally binding documents affordably. Small business owners can download a template from a wide variety of high-quality legal documents, edit it and have an in-house legal team review it. It just needs to be printed out and signed to make it legally binding.
Valid signatures have changed over time
The answer to the question of what amounts to a valid signature has changed over time as society changes. It has been satisfied in the past by various means, including the physical signing of a given name, marking with a cross and the use of a stamp. As technology has advanced, other means of execution have become available, and the law is responding accordingly.
Many people today expect transactions to be digital and instant, regardless of the type of transaction. Businesses and individuals are using technology to make binding transactions more convenient. This brings up the question of electronic signatures. When legislation requires a document to be signed, is an electronic signature considered legal?
Are electronic signatures valid?
According to the Common Law system, judicial decisions are binding and laws aren’t always of a written nature. It is legal to use electronic signatures to sign formal contracts under English Law.
A contract does not have to have a written signature. It doesn’t matter whether an agreement is verbal, in the form of a signed paper document or electronic as long as legally competent individuals reach an agreement.
If any area of the law is covered by a regulator, specific regulatory requirements may have to be followed to make a signature valid. For example, lasting power of attorney documents have to be registered to make them legal.
Wills and deeds are exceptions to the general rule. Wills are a special form of deed where current law is inconclusive about electronic execution.
Electronic deeds are accepted for registration at the UK Land Registry if a notice is issued under rule 54C of the Land Registration Rules of 2003. Currently, the only deed subject to the notice is a “digital mortgage” which is signed using a purpose-built service.
In the U.K. Qualified Electronic Signatures are regarded as valid and legally binding. Non-qualified Electronic Signatures may be submitted in court but usually need extra supporting evidence.
Benefits of electronic signatures and future considerations
There is currently more focus on electronic execution of transactions due to increased use of blockchain and automated “smart” contracts. This means that lawyers need to be familiar with the pros and cons of forms of technology that could be used to “sign” documents.
Electronic signatures have some clear benefits. It makes the process of signing documents quicker, has a positive effect on productivity and can give a business a competitive edge.
However, possible fraud needs to be seriously considered when using electronic signatures. The possibility of video witnessing of electronic signatures has been raised and a government-backed working group is considering the practical issues involved in the use of electronic signatures and how they can be improved.