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Economy Economy

Give businesses the right to insist on a digital signature

Last updated: 09:50pm 3 December 2019

We will give businesses the right to insist on a digital signature and the right to digital cancellation of contracts.

Conservative Party Manifesto 2017, p.78

Our verdict

Some transactions are still regulated by the 1677 Statute of Fraud, which requires certain documents to be in writing and signed. However, EU regulations provide that electronic signatures cannot be denied legal validity and are admissible as evidence in legal proceedings. While the Electronic Communications Act 2000 mirrors EU provisions in the UK, it does not expressly set out the validity of electronic signatures. The resulting lack of clarity may discourage businesses from using quicker, electronic means, especially small companies which lack access to legal expertise. Consequently, this policy promised to give businesses the right to insist on a digital signature.

Under this government, the Ministry of Justice tasked the Law Commission with reviewing the law “as regards the validity of electronic signatures” and to consider whether legislation was required. In August 2018, the Law Commission confirmed the validity of digital signatures, and provided initial recommendations to resolve connected issues around fraud and witnesses. In September 2019, the Commission published a report which further laid out the path to reform, notably stating:

“Government may wish to consider codifying the law on electronic signatures in order to improve the accessibility of the law.”

The government has not yet responded.

By the end of its term of office, the government had established the legal validity of electronic signatures via the Law Commission. However, the Commission found that businesses already had the “right” this policy promised to deliver. Our interpretation is that for this policy to attain a status of ‘done’, the government would have to “give businesses” a clarity that is lacking, by acting on the recommendation to codify the law. It has not done so. For that reason, this remains ‘in progress’.

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