Last month the Law Commission published its Report on the electronic execution of documents. Although the law in England and Wales has always recognised a range of signatures – including initials, pictures and printed names – the emergence of digital “smart contracts” in recent years has led to uncertainty about what constitutes a valid method of signature, and in particular, the legal status of electronic signatures.
The Report concluded that ‘in most cases’ electronic signatures will be legally binding for any document, including deeds, provided that the signatory intended for it to be so. However, the Law Commission has reaffirmed the legal requirement for the physical presence of a witness where the document requires it, curbing speculation that remote witnessing, such as via Skype, would be a natural progression in the law on electronic signatures.
Nonetheless, the general validity of electronic signatures has ramifications which businesses should be aware of to avoid entering into contracts inadvertently. For example, in Neocleous v Rees  it was held that the automatic generation of a name and contact details in the footer of an email chain was capable of concluding a contract which had been formed over a series of emails.
In that case, a dispute over a right of way was settled by the parties’ solicitors in an email chain. The Claimant successfully sought specific performance in relation to the compromise agreed between the solicitors. The Court found that the solicitor had agreed to the compromise agreement on behalf of their client because of the inclusion of their name in the footer of the email chain which amounted to an electronic signature.
Businesses should therefore consider the implications of their name and contact details being included in an email footer when negotiating agreements with their suppliers and customers. A clear disclaimer should be included in the email footer to prevent the accidental formation of a contract. This is particularly important since email footers are often automatically populated.
Email footers are not the only method of signing that businesses should review. The use of tick-boxes, unique PIN numbers or secure passwords provided to customers or suppliers are all now potentially valid forms of signing a contract. Businesses should therefore review their processes around these methods to make sure that, where contracts are being concluded, appropriate terms and conditions have been incorporated.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.