HomeCompany NewsPractical legal considerations for the use of e-signatures

Practical legal considerations for the use of e-signatures

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The use of e-signatures in businesses has been overlooked for the past number of years with only a small percentage of Irish businesses making use of the method.

The necessity for social distancing during the Covid-19 pandemic has given rise to the use of e-signatures instead of ‘wet ink’ signatures. As with many business and legal practices adopted during the pandemic, it’s likely that e-signatures will continue to be used even after we return to work. Below, the different types of e-signatures are set out. The nature of a business will determine the most suitable type of method of e-signature.

There are two types of e-signatures available. In Ireland, e-signatures are governed by the Electronic Commerce Act 2000  (“the Act”). The Act confirms that a contract cannot be denied it’s enforceability on the ground that is has been executed electronically. Under EU legislation (Regulation (EU) No 910/2014), e-signatures are recognised across the member states of the Union.

Simple e-signature: A simple e-signature is the most commonly used form of e-signature. It is used by the signatory and can be as straightforward as typing a name at the bottom of an email or a letter.

Advanced e-signature: Is a unique signature which is linked specifically to the signatory and can be identified by that signatory. It is created by using data that is under the sole control of that signatory. The data is set up that if a change occurs in the signature then the signatory is notified of that change.

A qualified electronic signature is a type of advanced e-signature and is considered to be an electronic “handwritten signature” specific to the signatory. They are created by a device and are admissible in court and can be used for general business uses. The type of document that requires a qualified electronic signature usually also requires execution under a witness; or a document that requires a seal.

What is excluded from the scope of the Act?

Under Section 10 of the Act, the execution of wills, codicils, enduring power of attorney, documents governing interests in real property, affidavits and sworn declarations are excluded. In 2017, the government made clear that when the Act was first implemented that Section 10 was not intended to be permanent, but that at the time, the technology was not yet at an advanced enough stage to support e-signatures in these areas. Due to the sensitive nature of the documents above, a number of safeguards are necessary and will be required to ensure protection against fraud before changes will be made, thus making the use of e-signatures in these areas more complex. However, given the changing times we now find ourselves in 20 years after the first implementation of the Act, perhaps now is a suitable time to take another look at the use of e-signatures and the technology that we now have to support the introduction of e-signatures.

Counterpart signing

In certain circumstances, where it is not practical or possible to have all parties to an agreement present to sign, and where an e-signature is not sufficient (in the case of deeds and real estate transactions), then counterpart signing is a useful alternative. Signing in counterpart means that duplicates of the agreement are printed so that each party can sign separate pages. When the signature parties are added together and added to the agreement; together the signature pages and the main documents are considered a complete agreement. A clause is usually included in the agreement which allows the parties to sign in counterpart. Having such a clause provides clarity to the parties involved, on the provisions of a counterpart clause.

If you have any queries on corporate or commercial issues, please contact Michael Lavelle at [email protected] or call 01 644 5800.