Electronic Signatures – the new norm in a pandemic world?
3rd April 2020
The coronavirus has led to an increase of the number of people working from home and one of the issues we are regularly advising clients on in this regard is the signing of documents using an electronic signature (or e-sig) rather than a ‘wet ink’ signature.
Whilst the law surrounding electronic signatures has been in place for some time electronic signing of documents has never taken off for one reason or another. Perhaps the main reason being that there has never been a need to - that has now changed given wide spread remote working due to COVID-19.
Signing documents electronically allows for all parties to sign a document remotely letting businesses and individuals continue to operate in the way they would pre-lock down (in relation to their contracts at least!)
The Three Standards
Not all electronic signatures are created equal. There are three different forms of electronic signatures to consider:
Simple electronic signatures – typically these take the form of scanned signatures or a tick-box with an additional declaration (for example, Docusign and Adobe Sign provide simple electronic signature functionality).
Advanced electronic signatures – as the name suggests such signatures are technologically more advanced and there are certain legal requirements to be met for an electronic signature to be regarded as being advanced:
(1) it is uniquely linked to the signatory;
(2) it is capable of identifying the signatory;
(3) it is created using electronic signature creation data that the signatory can, with a high level of confidence, use under his sole control; and
(4) it is linked to the data signed therewith in such a way that any subsequent change in the data is detectable
In practice an advanced electronic signature is typically carried out by using third party providers’ specialised software (for example, Sign&Send).
Qualified electronic signatures – meet all the requirements of advanced electronic signatures but in addition they must have been created by using a ‘qualified electronic signature creation device’ (for example a smart card and smart card reader) with a qualified third party certificate.
When should the different standards be used?
Under Scots law, the Requirements of Writing (Scotland) Act 1995 provides that ‘formal writing’ is required in five instances:
• certain types of guarantee;
• a will;
• a trust where the trustor is also a trustee;
• an offer to buy property (missives) and other documents dealing with land; or
• where (under Scots law) you wish a document to have self-proving status.
Outwith the above, documents under Scots law do not attract writing requirements so any form of electronic signature is valid (e.g. stock transfer forms, commercial agreements, shareholders agreements, etc). That being said, we would always recommend that an advanced electronic signature is sought over a simple electronic signature as it adds a degree of certainty and reassurance to all parties to the document and in addition it will provide greater evidential weight should it ever require to be relied upon in court.
For those that constitute ‘formal writing’ (as listed above) a qualified electronic signature is required in order for the document to be valid. Enrolled Scottish solicitors have access to Law Society smartcards which allow for QES’s to be provided on documents.
Should you have any queries in relation to electronic signatures and how the operate in practice, please contact us. WJM will remain open (operating on a Home Working Policy for most) and ready to assist and advise you during this difficult time.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at April 2020. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.