What Is An E-signature And Is It Legally Binding?

In everyday language an e-signature is just a digital form of a signature but in legal language the definition is somewhat wider. An electronic signature is defined legally as data in electronic form which are attached to or logically associated with other electronic data and which serve as a method of authentication. E-signatures come in many forms including manuscript signatures that have been scanned, Personal Identification Numbers (PINs) or merely a name typed at the end of an email message.

More sophisticated types of e-signatures are digital and biodynamic signatures. Digital signatures rely on a form of encryption to authenticate messages. In this type of encryption the signing party uses a key pair (private and public key). The signatory affixes the signature using their private key, while the recipient verifies the signature with the public key and decrypts the message.

Biodynamic signatures are versions of manuscripts signatures where a special pen and pad is used to measure and record the actions of the person as they sign. A digitised version of the manuscript signature is created and can then be attached to electronic documents.

App to allow e-signatures on legal papers

While e-signatures have been around for some time, a legal App recently broke new grounds enabling signatures to be applied on legal papers. This latest development from inCase allows clients to sign documents using touch-screen technology. The signature is automatically stamped with date and time and then verified by the law firm against a specimen made during a client visit or sent by secure email.

Are e-signatures legally binding?

In the UK the key legislation is the Electronic Communications Act 2000 (ECA) and the Electronic Signatures Regulations 2002. The important point to note is that the Act does not mandate particular forms of e-signatures, rather covers all types of electronic signatures, from those based on email exchanges to those using encryption or biometric technology.

The legislation further provides for the admissibility of electronic signatures in legal proceedings, essentially meaning that a person can validly sign a document without the need for a ‘wet ink’ signature. However, certain forms of e-signatures (for example, those with particular security requirements around their use) may be regarded as being more reliable evidence than others.

Although the ECA encourages the use of e-signatures, it does not make them legally effective where the law requires a traditional method of signing to be used (for example, documents required to be signed as a deed). In other words, the ECA addresses the admissibility but not the legal effectiveness of an e-signature, as this is to be decided by the court on a case-by-case basis.

Comment

In general, the courts are willing to adopt practical approaches to support the way transactions are now conducted. Recent case law demonstrates that e-signatures can, in principle, satisfy the requirement for a document to be ‘signed’ (Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd [2012] EWCA Civ 265). The courts will look at whether the method of signature used demonstrates an intention to authenticate, rather than whether it was a commonly recognised form.

For specialist advice about the use of e-signatures on business or legal documentation contact Peter Gourri today by email PGourri@rollingsons.co.uk or telephone 0207 611 4848.