Covid-19 has raised the question of whether it is possible to legally sign documents electronically. As a consequence of more people working remotely due to self-isolating, there are practical difficulties in obtaining a wet ink signature on a paper document, and in particular, having such a signature witnessed.
The short answer is yes, contracts can be created electronically under Scots law and electronic signatures allow parties to sign and enter into legally binding agreements.
However, there are certain contracts for which electronic signatures are not a valid method of execution. Furthermore, there has been reluctance to adopt electronic signatures, as many are unsure of the law and are wary of potential risks.
What is not an electronic signature?
If you print out a document, sign it in wet ink, and scan it, that is not an electronic signature. That is a signed paper document, of which a copy has been generated.
What is an electronic signature?
The Requirements of Writing (Scotland) Act 1995 tells us that electronic documents are documents which, rather than written on paper, are created electronically. These are not printed but are created solely, for example, as pdfs, word documents and/or emails.
Therefore, electronic signatures can take several different forms. The main three being: –
- simple electronic signatures;
- advanced electronic signatures; and
- qualified electronic signatures.
Simple electronic signatures
We come across simple electronic signatures often, for example:
- using a finger to sign on an electronic pad when a package is delivered;
- clicking an onscreen button such as “I agree”, or ticking a box saying “I accept the terms and conditions”; or
- electronically copy and pasting a signature (e.g. in the form of an image) into an electronic document.
The form of electronic signature provided by most service providers is a simple electronic signature.
Advanced electronic signature
Advanced electronic signatures (AES) are more secure since the signatory has a greater level of control over their use and any change to the signature is detectable. They are:
- uniquely linked to the signatory;
- capable of identifying the signatory;
- created using means that the signatory can maintain under their sole control; and
- linked to the data to which it relates in such a manner that any subsequent change in the data is detectable.
The availability of the AES is limited and only available through a third-party service provider.
Qualified electronic signatures
A qualified electronic signature (QES) is an AES with a qualified digital certificate that has been created by a qualified signature creation device. This device is responsible for qualifying digital signatures by using specific hardware and software that ensures that the signatory only has control of their private key.
A QES is the highest standard of electronic signature. Under Scots law, a QES is self-proving (probative), which means that the burden of proof is reversed and the document is presumed to be validly executed and does not require the leading of any evidence to establish its validity in court.
Unfortunately, at present, there are only very limited situations where a QES, and therefore probative electronic signatures, will be available. Platforms such as Adobe Sign or DocuSign do not meet the requirement for a QES.
There could also be issues where documents have to be submitted to an official registry or used as evidence in a foreign jurisdiction.
The most common QES would be a signature applied by a Scottish solicitor using their Law Society Smartcard, but thus far usage is gradual. The Law Society of Scotland is unaware of any provider in the UK of publicly available QESs for use by individuals.
The other QESs available are closed loop systems where the QES is issued for a particular purpose (such as Register of Scotland ARTL E-Signatures).
It is conceivable that the commercial reality imposed on business and organisations in light of Covid-19 may result in QES platform technology developing at a faster rate than initially anticipated.
When should you not use electronic signatures?
Electronic signatures are not an effective device for signing in relation to: –
- documents you want to have self-proving status under Scots law (seek legal advice on any matter specific queries);
- making of any will;
- the establishment of a trust;
- missives and documents relating to the transfer of real rights in property;
- unilateral gratuitous obligations (promises); and
- specific kinds of guarantees.
It is always worthwhile, if possible, to follow the formal writing rules when signing any legal document.
Counterpart scans of paper documents
The Legal Writings (Counterparts and Delivery) (Scotland) Act 2015 (the “Act”) introduced counterpart execution in Scotland on a legislative footing. A document executed in counterpart is one which is signed in two or more duplicate, identical parts which, once signed, creates one single document.
The Act has also clarified the law relating to electronic delivery of traditional paper documents. Such documents can be competently delivered as an attachment to an email. Therefore, contracts can be concluded where a scanned signed counterpart paper document is delivered by email as an attachment.
- Is the contract an ordinary everyday contract? Then a simple electronic signature is likely to be sufficient.
- Is formal writing required? Then a traditional wet ink signature witnessed on a paper document is necessary.
- Is a self-proving signature required? Then a traditional wet ink signature witnessed on a paper document is necessary.
If you have any queries regarding execution and electronic signatures, please do not hesitate to contact April Bingham or Oliver McInnes.