16 Oct 2020

Dispute Resolution

Signing documents remotely – understanding the legal implications

As more and more legal transactions are having to be executed remotely, our head of dispute resolution, Ben Jenkins, examines the implications of not being able to bring all parties together to sign documents in person.

“This year has presented many challenges for us all and continues to do so. With strict Covid-19 restrictions in place, it has been difficult for parties to meet so one particular challenge has been managing the execution of documents.

“In many cases, we have had to rely on getting documents signed electronically or having to scan and send copies of signed documents to another party but, understandably, some are nervous about the legal implications of this in case this does not make the documents legally binding.

“A document signed using an electronic signature is usually accepted as being authentic unless another party adduces some evidence to the contrary. These are some of the principles that a court would apply in relation to “wet-ink” signatures too. The party alleging that the document is not authentic (for example, alleging it was produced fraudulently) would need to prove, on the balance of probabilities, that this was the case.

“Recent case law illustrates my point. Although this particular case relates to events that happened prior to lockdown, it serves as a useful reminder of how remote execution works to bind parties. In Umrish (and others) v Gill [2020] EWHC 1513 (Ch), which involved a number of legal issues, Mr Gill had signed personal guarantees for a company’s Funding Arrangements of £1.5m plus interest in 2016. I must stress that personal guarantees are very important and potentially life changing documents, so legal advice should be taken before executing them.

“In 2018, Mr Gill was called upon to honour the guarantees and make the substantial payment to the Claimants. Mr Gill’s position was that he was not required to make payment because he denied that the guarantees were properly “delivered” (delivery being a strict legal requirement for personal guarantees). The signature section in each guarantee where Mr Gill had signed stated, as is standard: “EXECUTED and DELIVERED as a DEED (the day and year first above written) by BOBBY GILL in the presence of…”. Beneath this was a space in which the witness’ name, signature address and occupation were required. Mr Gill’s wife completed those fields in all the guarantees. Once signed and witnessed, Mr Gill sent scanned copies of the signed pages by email.

“Mr Gill’s barrister argued that the guarantees were not “delivered” because greater formality was required and what should have been sent were the complete documents with original signatures [our emphasis].

“That submission was rejected by the court; the court held that Mr Gill would have understood that by signing the guarantees and returning the signature pages (even by email) that he would be immediately bound by the content of those guarantees. Further, Mr Gill returned the documents unconditionally.

“This case demonstrates the importance of understanding the point at which a party becomes contractually bound by electronic means, the need to obtain early legal advice in relation to the enforceability of personal guarantees and the risks of litigating such points in the modern era, especially given the significant time and legal costs involved in such a challenge.”

Ben Jenkins is Head of the Dispute Resolution team at Harding Evans Solicitors. His team has extensive experience and a very successful track record in handling disputes across the full range of legal issues, including property litigation and professional negligence. For more information, contact Ben on 01633 244233 or email hello@hevans.com.

 

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