On the Dotted Line

The topic of electronic signatures seems cursed to eternal life. In the blue corner we have the established liberal English law approach to signatures, which eschews formality and emphasises intention to authenticate. In the red corner we have preoccupation with verifying identity of the signatory, with technically engineered digital signatures and with the EU’s eIDAS hierarchy of qualified, advanced and ordinary electronic signatures.

In the English courts the blues have it. Judges have upheld the validity of electronic signatures as informal as signing a name at the end of an e-mail or even, in one case, clicking an ‘I accept’ button on an electronic form. They have been able to do this partly because, with very few exceptions, the England and Wales legislature has refrained from stipulating use of an eIDAS-compliant qualified or advanced signature as a condition of validity. The EIDAS hierarchy does form part of our law, but – rather like the Interpretation Act - in the guise of a toolkit that is available to be used or not as the legislature wishes. The toolkit has for the most part remained on the legislative shelf.

The potential consequences of stipulating eIDAS-style formalities in legislation are graphically illustrated by the Austrian case of the Wrong Kind of Signature. A €3bn contract to supply double-decker trains to Austrian Federal Railways was invalidated because the contract was signed with a qualified electronic signature supported by a Swiss, rather than an EU, Trusted Service Provider.

The modern English law aversion to imposition of formalities was pithily encapsulated in an official committee report of 1937, describing the Statute of Frauds:

““'The Act', in the words of Lord Campbell . . . 'promotes more frauds than it prevents'. True it shuts out perjury; but it also and more frequently shuts out the truth. It strikes impartially at the perjurer and at the honest man who has omitted a precaution, sealing the lips of both. Mr Justice FitzJames Stephen ... went so far as to assert that 'in the vast majority of cases its operation is simply to enable a man to break a promise with impunity, because he did not write it down with sufficient formality.’ ”

For its part eIDAS continues to complicate and confound. February’s Interim Report of the Industry Working Group on the Electronic Execution of Documents, running to 94 pages of discussion, stated that ‘only’ qualified electronic signatures have equivalent legal status to handwritten signatures (meaning, according to the Report, that they carry a presumption of authenticity). Yet while eIDAS does require equivalent legal effect (whatever that may mean) to be accorded to qualified signatures, it does not require other kinds of electronic signature to be denied that status; nor has English domestic law done so.

Back in the courts, a recent decision of Senior Costs Judge Gordon-Saker in Elias v Wallace LLP [2022] EWHC 2574 (SCCO) continues down the road of upholding the validity of informal electronic signatures. Under the Solicitors Act 1974 (as amended) a solicitor’s bill cannot be enforced by legal proceedings unless it complies with certain formalities, including that it has to be:

“(a) signed by the solicitor or on his behalf by an employee of the solicitor authorised by him to sign, or

(b) enclosed in, or accompanied by, a letter which is signed as mentioned in paragraph (a) and refers to the bill.”

The Act states that the signature may be an electronic signature. It takes its definition of electronic signature from s.7(2) of the Electronic Communications Act 2000[1], as amended:  

“… so much of anything in electronic form as –

(a)   is incorporated into or otherwise logically associated with any electronic communication or electronic data; and

(b)   purports to be used by the individual creating it to sign.”

This is an unusual example of English legislation stipulating compliance with a defined kind of signature (albeit that S.7(2) is framed in very broad terms) as a condition of validity. Most legislation requiring a signature goes no further than a generally stated requirement that the document must be signed[2].

The bills in question were sent to the solicitor’s client as e-mail attachments. The bills themselves were not signed, but the covering e-mails concluded with the words:

“Best regards,

Alex

[first name and surname]

Partner

[telephone numbers, firm name and physical and website addresses]”.

The judge held:

1. The printed name of the firm incorporated in the invoice, like a letterheading, was not a signature. This unsurprising conclusion is reminiscent of Mehta v J Pereira Fernandes SA [2006] EWHC 813 in which the same was held for an e-mail address appearing at the top of an e-mail.
2. If the name ‘Alex’ was not generated automatically, clearly it purported to be used as a signature.
3. If the name ‘Alex’ was auto-generated, then on the authority of Neocleous v Rees that would constitute a signature. The e-mail footer was clearly applied with authenticating intent, even if it was the product of a rule.

The judge also held that ‘letter’ should be interpreted to include e-mail. That is a salutary reminder that the ability to conduct a transaction electronically may not be only a question of whether electronic signatures are permissible. Other requirements of form and process can also come into play.

[1] Note that the role of S.7 was to make explicit (almost certainly unnecessarily) that electronic signatures as defined by the section were admissible as evidence, whereas the Solicitors Act provision concerns substantive validity.

[2] As to which, see the England and Wales Law Commission’s Statement of the Law in its Report on Electronic Execution of Documents (2019).