The importance of contracts in our daily lives cannot be underestimated. In fact we enter into contracts so often that we sometimes don’t even notice we are doing so. We are contracting when we buy a train ticket, a pint of milk or a book. In other situations the contract will be the result of long and careful negotiation like buying a house or for example in the commercial field, when a local authority purchases a school. Given the materiality of contracts and the rapid rise in electronic media we must question whether the rules which were designed for paper and oral contracts still work for e-contracts.
The use of signatures in paper transactions has developed over many years. Manual signatures play three significant roles. They identify the signatory. They provide certainty as to the personal involvement of that person in the act of signing. They associate that person with the contents of the document. Parties to transactions receive comfort as to the authenticity and integrity of the transaction documents from the signatures, seals or other accepted marks applied to them.
Not surprisingly the challenge and commercial imperative for the success of e-commerce must be to find the electronic equivalent of the manual signature. With the continued development of technology and prevalence of e- commerce, parties increasingly require to be reassured that the use of electronic signatures will be recognised by law. So what is the legal position regarding electronic signatures?
At the moment in the UK the legislation covering this is the Electronic Communications Act 2000 and the Electronic Signatures Regulations 2002. However, in the consultation on the 2013 Regulations it was proposed that the law in Scotland regarding electronic signatures be brought into alignment with EU E- Signatures Directive 1999/93. This means that for an electronic document to gain the legal presumption of a signed and witnessed paper document, the signature used to sign the document must be an “advanced electronic signature” based on a qualified digital certificate. An electronic signature is an advanced electronic signature if it is:
- Uniquely linked to the signatory
- Capable of identifying the signatory
- Created using means that the signatory can maintain under his sole control
- Linked to the data to which it relates in such a manner that any subsequent change of the data is detectable.
Thereafter the identity of the individual using the advanced electronic signature will require to be verified by a certification authority who will then issue a digital certificate (signed with the certification authority’s own digital signature for authentication) which will confirm that the sender is who they claim to be. That digital certificate can then be appended to a message or a digital signature to confirm the identity of the sender.
In short electronic signatures based on digital certification provided by a certification authority will allow parties to rely on the validity of the signature. The electronic signature will be legally valid and admissible as evidence in legal proceedings in relation to any question as to the authenticity of the electronic communication or as to its integrity.
Change no doubt will be slow but electronic signatures will at sometime soon be commonplace.