No Good Deed Goes Unwitnessed
11 - 05 - 2022
How easy is it to sign a document?
Pretty easy, you would imagine, but it’s not quite as simple as it seems, and it has been made especially difficult over the last two years or so, and the legal position is made more complicated by the invention and proliferation of electronic signing software.
For the purposes of this article, there are two basic categories of document: simple contracts and deeds. I am not going into any detail on oral, implied or course of dealing contracts (which can be just as binding as a written contract) or wills (which fall outside of my practice area).
Simple contracts only require a signature, which can be physically provided in “wet-ink”, or inserted utilising e-sign software – essentially any mark by a person indicating approval of the terms provided. Where the party to the contract is an individual, that individual signs, and where it is a company, it is generally a director of the company that must sign, although a person can be authorised within an organisation even if not a director.
So far so simple.
Deeds are where it becomes interesting (well, interesting to boring people like me). In addition to the signature of, or on behalf of, the person entering into the deed, the document must be:
- in writing;
- clear on the face of it that it is intended to take effect as a deed;
- validly executed as a deed; and
There are certain circumstances where a deed is required by law, and often good reason for using a deed, including where there is no consideration passing (one of the requisite elements for a contract to exist) or where a longer limitation period (the time within which a claim can be brought under a contract) is required.
For the purposes of this article, the most important requirement is that the document is validly executed as a deed.
One of the methods of execution of a deed available to a company is by either two directors or a director and the company secretary signing the document. This is fairly straightforward, and there is no need for both parties to be physically in the same place. As such, this is the one type of deed that can potentially be validly executed as a deed using electronic signature software.
The crux of this article is more in relation to the execution of a deed by an individual, or by one director on behalf of a company, in the presence of a witness who attests the signature. The wording “in the presence of” is very important, and links heavily to e-sign software, as touched upon at the outset.
The only strict requirement for a witness is that they are not a party to the deed. Technically speaking, a relative, spouse, or minor can witness the signature, but as the purpose of the witness signing is to provide, if necessary, evidence of who signed a document, it is best practice to ensure that the witness is an adult who is entirely independent of the matters dealt with by the document. Although also not a legal requirement, it is also best practice for the witness to print their name, address, and occupation, which will assist in locating that person in the event it is required.
So, “in the presence of…” This is provided by statute, and has also been considered by case law, but as the last case to look at this in any detail was in 1882, the Law Commission prepared a report in 2019 on the electronic execution of documents, and the Company Law Committee of the Law Society published a Q&A in 2021. These are both very interesting, but if you want to avoid reading a 137-page report, perhaps stick to the Q&A.
An important point: it is possible for a witnessed deed to be executed utilising e-sign software, but only where the person executing the deed, and the person witnessing that signature are physically in the same place – “in the presence of…”. As it presently stands, and it will be for rich corporations with deep pockets to fight over, you cannot properly execute a witnessed deed using e-sign software in separate locations. The Q&A goes into a bit more detail and is well worth a read.
If a deed is not properly executed, then it may well not take effect as a deed, and as there is usually a very good reason for using a deed, it is vitally important that it is properly executed, failing which it may only take effect as a simple contract, or may have no effect at all.
We have given a great deal of consideration to this point, as pretty much every area of law will require a deed at one time or another, and I cannot think of a transaction where a deed has not been used in one way or another.
The conclusion we have arrived at, is that IP addresses may be the saviour – most e-sign software will provide an “envelope”, which details when each person has received, opened, and signed a document, and most will usually also provide the IP address from where they signed the document. Therefore, if the IP addresses for the signatory and the witness match, this should be conclusive evidence that those people were physically in the same place, satisfying the legal requirements for the proper execution of a deed.
This is, of course, a very quick summary of the law in this regard, and for more advice, we are always here to help.
If you need support or advice on any of the above, call our Commercial team on 01423 542 777.