Are Electronic Signatures Legally Binding?

This is a question I have been asked a number of times recently. In an age when our consumer habits can be fed with the simple click of a mouse, physically signing our name on a document can seem terribly old-fashioned. In particular, trusted electronic signature brands such as Docusign and Adobe eSign are marketed on the basis that they are legally binding. But are they?

The answer, as is very often the case with the law, is: ‘It depends’. Why is this? 

Well, the law moves slowly but surely. With the fast moving development of the products and services available on the internet, it takes some time for the law to catch up. We are yet to know of the definitive UK court decision as to whether or not ‘signatures’ made using electronic service providers, such as Docusign and eSign, are legally binding. If such a court decision was reached, this could have a major impact, for example you could be signing all your legal documentation for moving house on your tablet whilst in your pyjamas!

In the absence of this decision, courts have returned to basic English law principles for a binding contract:

• Is there an offer and acceptance? For example, I offer to buy your car and you agree to sell it to me;
• Is there consideration? That being, I pay you money for the car;
• Is there an intention to create legal relations? Do we both seriously intend that this will a permanent, legally binding sale. 

If all of the above principles exist, then it doesn’t matter whether there is a signed contract or not. It could, for example, be agreed by shaking hands.

Over the years, the courts have found that a number of different types of ‘signature’ were legally binding. These have included signing your name, or just your initials, or even a pseudonym or a code of letters and numbers which identifies you. They have also included a signature on a fax, a rubber stamp, a typed signature, typing your name at the end of an email and even a signature from a signature writing machine (#antique). However, in all these examples, those basic English law principles for a binding contract were present.

Without a court decision to that effect, you can’t guarantee that an English court would consider a ‘signature’ given using an electronic signature provider such as Docusign or eSign would be legally binding. 

The English law does provide for ‘advanced signatures’ by certified providers, which would give an advanced electronic signature verified against your personal identity documents, such as your passport. But, these are cumbersome to arrange and expensive to maintain. And what if your partner goes onto your laptop and decides to make a few purchases while you’re not looking?

In a recent German case an online seller through an auction website received emails from three apparent buyers making purchases from him, but the purchase price was never paid. 

The seller took the buyers to court on the basis that the emails from the buyers were a binding contract with an electronic signature. The buyers claimed they did not send, or sign, the emails. The seller could not prove the buyers sent or typed their names into the emails. The seller lost. It is quite possible therefore, that a verified advanced electronic signature stored in your computer could be used or sent by someone else without your knowledge, with the same effect – the person relying on the contract could not prove it was sent or executed by the other party. 

What might the future hold? 

Well, the law changes on 1 July 2016 with the introduction of the EU Electronic Identification Regulation, which applies to English law. This is intended to make it easier for everyone to have advanced electronic signatures using public key cryptography though ‘trusted providers’. I suppose it might catch on this time (it didn’t last time). 

Personally, my money is on a juicy Court of Appeal showdown between technological innovators, resulting in a clear indication of exactly which electronic signatures we can and can’t trust. Until then, don’t forget your fountain pen.