The Use Of E-signatures In Documents

Joseph Tan Jude Benny LLP | View firm profile

  1. The changes brought about by COVID-19 has forced businesses to re-think the efficiency of their processes. One way in which businesses have sought to improve efficiency is by incorporating e-signatures into their standard operating procedures.

  1. The benefits of e-signatures are uncontroversial. A signing that might have required several parties take time off to travel to a fixed location, can be done within a few minutes over a video-conferencing platform.
  1. In this article, we will answer some frequently asked questions on the use of e-signatures.

Q: Do my e-signatures have to take a certain form?

  1. While the Electronic Transactions Act 2010 (“ETA”) does not prescribe a form for an e-signature, it does lay down certain pre-requisites before an e-signature can legal effect.
  1. S 8 of the ETA provides that where a rule of law requires a signature, or provides for certain consequences if a document is not signed, that requirement is satisfied if –

a. a method is used to identify the person and to indicate that person’s intention in respect of the information contained in the electronic record; and

b. the method used is either —

i. as reliable as appropriate for the purpose for which the electronic record was generated or communicated, in the light of all the circumstances, including any relevant agreement; or

ii. proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence.

  1. Thus, an e-signature may take the form of a scanned signature, or a signature drawn on an electronic device. An e-signature can also take the form of a typed name.
  1. Note that in the context of a legal assignment, an email where the sender signs off with a nickname is not likely to satisfy the signature requirements in s 8 of the ETA.
  1. If extra steps are taken to ensure that it can be verified that, at the time the e-signature was made, the e-signature was:

a. unique to the person using it;

b. capable of identifying such person;

c. created in manner or using a means under the sole control of the person using it; and

d. linked to the electronic record to which it relates in a manner such that if the record was changed the electronic signature would be invalidated,

the e-signature would be treated as a “secure electronic signature” for the purposes of the ETA.

  1. The main difference between “secure electronic signatures” and “normal” e-signatures is that in a legal dispute, it would be presumed that:

a. The “secure electronic signature” is the signature of the person to whom it correlates; and

b. The “secure electronic signature” was affixed by that person with the intention of signing or approving the electronic record.

  1. “Normal” e-signatures are not accorded such presumptions.

Q: Can I use e-signatures to sign contracts?

  1. Assuming the e-signature satisfies the pre-requisites in the ETA, their use in simple contracts should not pose an issue.
  1. That said, it is important to consider whether the contract pertains to either one of the following matters:

a. The creation or execution of a will;

b. The creation, performance or enforcement of an indenture, declaration of trust or power of attorney, with the exception of implied, constructive and resulting trusts;

c. Any contract for the sale or other disposition of immovable property, or any interest in such property; and

d. The conveyance of immovable property or the transfer of any interest in immovable property.

  1. These types of contracts have their own signature requirements, and we recommend seeking further legal advice before using e-signatures to sign these documents.

Q: How about deeds?

  1. Apart from deeds relating to matters set out at paragraph 12 above, there is generally no issue with executing a deed via e-signature.
  1. However, deeds must comply with other formality requirements to be enforceable. As such, businesses should consider the following before making a decision of whether to execute a deed via e-signature:

a. Where the deed is signed by individuals, common law dictates that it must be “signed, sealed and delivered” to be enforceable.

For a deed to be “delivered”, it suffices that the relevant party acknowledges by words or conduct his intention to be bound by the deed. There is no requirement that there must be physical delivery of the deed.

With regards to the deed’s “sealing” requirement, this can arguably be satisfied by electronic means given that a physical seal is not required. For example, an electronic red seal could be used to represent the physical manifestation of a seal. Do note however that the validity of this type of electronic sealing has yet to be tested in court.

b. With regards to deeds executed by companies, the Companies Act states that a company may execute a document described or expressed as a deed without affixing a common seal by signature of:

i. A director and secretary of the company;

ii. At least two directors of the company; or

iii. A director in the presence of witness with attests the signature.

The position on whether a witness can witness a document via a video conferencing platform is presently unclear. We therefore caution against executing a deed via e-signature if the signing method at paragraph 14(b)(iii) is used.

More from Joseph Tan Jude Benny LLP