Signing Contracts When Working from Home: What’s the Risk?Ryan Marr
In an attempt to slow the spread of COVID-19, the offices of many businesses remain closed. For those that have opened their doors, many continue to recommend that their staff work from home or that the offices operate on a skeleton/reduced staff basis. This will inevitably mean that it may not always be possible for contractual parties to execute documents in person. So, what does that mean for you legally?
It makes sense to start by explaining the two fundamental ways in which documents can be executed: either as a contract; or, as a deed.
A deed is a written instrument, executed with strict formality. There are four formalities to satisfy when executing a document as a deed:
- a deed must be in writing;
- it must be clear from the face of the document that it is a deed (usually achieved by referring to the document as a deed within the document itself);
- it must be executed correctly according to various statutory requirements (this includes, for the most part, the need for signatures to be witnessed); and
- it must be delivered. Delivery does not mean physical delivery. A deed is ‘delivered’ when the parties to the deed make clear their intention to be bound by the deed.
In contrast, a simple contract may be made under English law in writing (or orally) without the need for the formalities required of a deed.
So how can I execute documents virtually?
The Law Society has issued (non-exhaustive) guidance on the virtual execution of documents.
Simple contracts can easily be executed through use of an electronic signature.
Electronic signatures can take a number of different forms, including:
- typing your name into a contract or into an email containing the terms of a contract;
- electronically ‘pasting’ your signature or an image of your signature into an electronic version of the contract;
- accessing a contract through a web-based e-signature platform and clicking to have your name in a typed or handwriting font automatically inserted into the contract; or
- using a finger, light pen or stylus and a touchscreen to write your name electronically.
In the case of deeds, matters are somewhat nuanced. The general attitude of the courts towards electronic signatures is that it seems theoretically possible for a deed to be validly executed electronically provided the requirements for a valid deed can be satisfied. However, an issue (amongst others surround the formalities for creation of a deed) arises at the point of requiring a signature to be witnessed. Generally speaking, signatures to a deed require an independent adult witness to be present. This is usually not an issue but, when you are working from home, social distancing or self-isolating due to COVID-19, things get tricky. To be independent, the witness must not be related to you. This means you cannot simply call on a family member, living in your household, to witness your signature to the document.
With that in mind, how do you get your signature witnessed? Well, the Law Society has been somewhat unclear on this point but it appears that, where a witness cannot be in the same room as you when you sign a document electronically (which is the preferred and advised option), the solution may not be as simple as having the witness watch you sign the document via video call and then signing the document once it is sent on to them. After all, this could create evidentiary risk as to whether the person genuinely witnessed the signing.
Until the issues surrounding virtual execution of deeds and, in particular, the remote witnessing of signatures are clarified by way of parliament or court ruling, it would appear that the safest approach is to avoid seeking to execute deeds electronically and for witnesses to be physically present for the signing of the same unless absolutely necessary and, if electronic signatures are to be used, to take legal advice on the steps to be taken to effect a valid execution. Electronic signature of simple contracts, however, should be of little issue.
If you would like further information and advice on the execution of contracts, contact one of our specialist corporate and commercial solicitors on 01782 262031.