Closing the Deal During COVID: Signing of Contracts and Deeds
For many of us, working from home is the new norm as we deal with the outbreak of Covid-19. While this means that creature comforts are delightfully close, access to printers, scanners or the boss’s wet ink signature may be difficult to come by, leaving some wondering how to properly execute contracts and deeds. In this blog, we set out tips for closing the deal when traditional methods of signing and witnessing agreements are not possible.
Valid execution of contracts
Is putting pen to paper a struggle? No problemo – signing simple contracts electronically is usually valid under English law, provided the essential elements of a contract are present (these are: offer and acceptance, consideration, certainty of terms and an intention by the parties to be legally bound).
A simple contract is one that does not pertain to the sale or other disposition of land, or where legislative or case law restrictions apply. The rules are more stringent here, so do reach out if you are unsure as to whether electronic signatures are appropriate. Also, if the party you are contracting with is located overseas, or your contract is not governed by English law, it is important to check that, in the applicable jurisdiction, an instrument signed electronically will be legally recognised and enforceable. Our colleagues report on the difficulties on electronic execution of documents under Czech or Slovak law, for example.
Examples of electronic signatures include typing your name, affixing a JPEG image of your ink signature or using a trustworthy e-signing platform. Not all electronic signatures are created equal, with some carrying more evidential weight than others. For instance, a JPEG of your handwritten signature will be more resilient to fraud than typing your name into the signatory block of an agreement. Reputable e-signing platforms also use fraud prevention technology and issue completion certificates at the end of the signing process.
We have a lot on our plates these days, so if signatures are in the ‘too hard’ basket, the default position under English law is that a contract can be finalised without any signature, for example, orally, through conduct or by email. The first two options carry risks from an evidence and dispute perspective. However, it is not unusual for parties to close a deal by exchanging emails. This will be sufficient so long as the essential elements of a contract are all there (see above). Please also remember to keep a record of the email correspondence and ensure that the emails reflect certainty of contractual terms and an intention to be bound.
Do think carefully before doing away with signing and writing; there are a number of transactions where these formalities are required by the law. For example, assignments of certain intellectual property rights including copyright must be signed (e-signing will do) and be in writing.
Signing and witnessing of deeds
Deeds can also be signed electronically. However, the law requires deeds to be signed in front of a witness, who is physically present (virtual witnessing is not sufficient). Social distancing and travel restrictions make this a sticky one.
Some get-arounds to consider are: (i) converting the deed into a contract by requiring payment of consideration (this can be a very small amount, for example £1); (ii) having someone you live with witness the deed (although perhaps your only option during Covid, a witness should ideally be independent in the event that they are called to provide unbiased testimony that the document was executed properly); (iii) witnessing while practising social distancing e.g. at least two meters apart, outdoors or separated by a transparent protective barrier; and (iv) if an English company is party to the deed, having two directors, or one director and a company secretary, sign the document (in which case the requirement for witnessing falls away).