Following on from parts 1 – 3 in our series of articles relating to the COVID 19 crisis what follows below is an overview of the alternative methods of executing legal documents that may be helpful in keeping business moving while at the same time being cognisant of the necessary COVID-19 restrictions that are in place.
eSignatures, Electronic Contracts and certain other Electronic Transactions
The Electronic Commerce Act 2000 (the “e-Commerce Act”) and EU Electronic Identification and Trust Services for Electronic Transactions in the Internal Market Regulation 2014 (the “eIDAS”) provides for the legal recognition of e-signatures in Ireland.
The utilisation of such signatures and contracts can of course play an important role in managing the COVID-19 crisis since no physical contact or physical paper is required. However, not all legal documents can be signed in this fashion as outlined below.
Types of E-Signatures
The eIDAS provides a broad definition of what qualifies as an electronic signature without any reference to a specific technology. Indeed, the eIDAS is ‘technologically neutral’ and the legal effects it grants are achievable by any technical means provided the requirements of regulation are met. This leaves room for interpretation and technological innovation. For example, a simple “electronic signature” (set out below) could be a PIN code, a password, a scanned signature or a biometric signature. There are many applications available today to assist with this process, for example Adobe Sign.
eIDAS qualifies three types of E-Signatures.
a. The simple electronic signature: “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign”.
b. Advanced electronic signature: should be: (i) uniquely linked to the signatory; (ii) capable of identifying the signatory; (iii) created using electronic signature creation data that the signatory can use under his/her sole control; and (iv) linked to the data signed in such a way that any later change in the data is detectable.
c. Qualified electronic signature: is “an advanced electronic signature that is created by a qualified electronic signature creation device and which is based on a qualified certificate for electronic signatures.”
Documents that must be executed by wet ink signatures
a. Wills, codicils or any other testamentary instruments to which the Succession Act 1965 applies.
b. Trusts.
c. Enduring powers of attorney.
d. Documents by which interest in real property (including a leasehold interest in such property) may be created, acquired, disposed of or registered, other than contracts (whether or not under seal) for the creation, acquisition or disposal of such interests.
e. Affidavits or a statutory or sworn declaration.
f. Documents required by the rules, practices or procedures of a court or tribunal.
Other considerations
a. Under Section 13 of the e-Commerce Act, both parties must agree to the contract being executed by the use of an e-signature.
b. What is the contractual definition of “writing” within the contract, this definition may in fact exclude e-signatures.
c. Where a company is executing a contract as a deed, the company seal must be used by the company. It should be noted that there is currently no electronic means for the affixing of corporate seals in Ireland, so the seals need to be physically affixed to the deeds. However, one possible solution in this regard is for the company to grant a power of attorney to an individual (a natural person) to execute that deed on the company’s behalf using an e-signature.
d. Witnessing of e-signatures can also be conducted in an electronic manner. For example, the witness could be physically present when the signatory applies his/her e-signature and then in turn the witness applies his/her e-signature as a witness or alternatively the witness prints off the document that it has witnessed being signed via e-signature and applies its standard signature. It is seen as best practice that a witness be physically present at the signing and not rely on for example video conferencing for the purposes of witnessing. Therefore, in light of the COVID-19 restrictions a witness could in theory witness the signatory, through a window, applying his/her e-signature to the document on his/her computer and then in turn apply its e-signature as witness on his/her computer. This means that all physical contact is avoided while allowing the witness to be physically present at the signing.
e. Certain authorities or registries will often insist on a wet-ink signature for example the Company Registration Office.
f. Most commercial contracts will include a ‘counterparts’ clause which essentially means that there is no need for every party to the contract to sign the same piece of paper. In tandem with this concept, contracts are often “virtually executed”. This means the contract is exchanged electronically between the parties with a commitment to return the original documents by a certain date and that the return of the PDF signed signature pages constitutes acceptance of the terms and authorises the other side to date and release the contract at the date of closing thus creating a legally binding contract.
During these challenging and unprecedented times our thoughts go out to all of those affected by COVID-19.
Please stay safe.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
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