Are Electronic Signatures Legally Binding?

In a world that relies upon the internet and with the continued growth of e-commerce, mobile devices are becoming more and more relied upon for contractual agreements and arrangements. As such, electronic signatures are requested and given on a regular basis for a host of different purposes, but the legality of an ‘electronic signature' may be somewhat vague.

The following article reviews electronic signatures, their uses, whether they are legally binding and how signatures and the authority that they provide are protected by UK law.

The History of Electronic Signatures

The dependency of a variety of documents and online agreements often relies upon the electronic signature of participants to a contract or deed. This may include interactions such as investment transfers, loan agreements, sales and lease arrangements. Legally, a contract is created when there is an offer presented, an acceptance made and an intention given for a legal relationship to be secured by all involved parties. What is more, as per the Law of Property (Miscellaneous Provisions) Act 1989, contracts relating to land must also be made:

• In writing
• Bear the signatures of each party or be signed on behalf of each party
• Be inclusive of all of the agreed terms

If these terms are not met, the contract will not be legally binding or valid.

What constitutes a signature?

A signature, in basic terms, is a manuscript inclusion of a party's name to an agreement document which communicates their willingness to be bound by the terms. An electronic signature serves to work in the same way, but rather than being a handwritten signature, the data is captured in an electronic form.

Electronic signatures are available in a variety of ways, and include:

• A scanned copy of the individual's handwritten signature
• A cryptographic signature whereby the individual uses a key pair (public and private key). The person signing affixes their signature to a document using their private key and the recipient of the signature checks it with the public key.
• Through clicking a button or checking an ‘I agree' box request for purchases of goods or services.
• A biodynamic copy of a handwritten signature. In these instances, a specific type of pen and pad are used to capture and record the actions of the individual when they sign. This digital data can then be saved and attached to documents as and when required.

To be used as a reliable signature, an electronic signature needs to be unique to the signatory and must be identifiable as belonging to the individual signing. The signature must have been created solely under the control of the signatory and must be capable of being linked to the relevant document.

Electronic Signatures and Legally Binding Contracts

The Electronic Communications Act 2000 made electronic signatures capable of being used in the conclusion of contracts. The act sets out the admissibility of the use of electronic signatures in legal cases where the electronic communication is questionable or lacks integrity. This means that ‘wet ink' signatures are not necessary for validity and an electronic signature can suffice in many instances.

Recent legal cases have seen the courts' adopt modern thinking with regards to the interpretations of old laws and this has allowed them to accept electronic signatures as authentic and valid intentions.

Electronic Signatures and Deeds

Unlike with contracts, electronic signatures relating to deeds and land registry are more complex and vague. At present, there is no defined understanding as to whether electronic signatures are acceptable and valid forms of intention with regards to deeds. With this in mind, it is advisable to assume that a handwritten signature is necessary.

At the current time, the Land Registry will not accept an electronic signature on documents, and so hard copy signatures should always be used.