Digital e-Signature and the Law

Digital E-SIGNATURE and the Law

The Covid-19 pandemic has created an enormous level of difficulty for business in general. New challenges need to be met with creative solutions. Unfortunately, law is often an area of service delivery that remains trapped in a time warp, only to suddenly to find that the tide has gone out and…..well, you know!

Our experience over the last month or so, guiding and advising on a major intra-group acquisition of a financial institution in Ireland, has exposed the vagaries of the electronic signature system. Even in an ordinary world, it would have proved difficult to complete. However, given the number of items that needed to be closed out, coupled with the onset of the Covid-19 crisis, to say that this became challenging would be an understatement.

So, what are the key matters that arise with ‘e-signatures’?

Legal Basis for e-signatures

The e-Commerce Act provides for the legal recognition of e-signatures in Ireland, however, the EU Electronic Identification and Trust Services for Electronic Transactions in the Internal Market Regulation 2014 (the “eIDAS”) greatly altered the landscape.
The types of e-signature

  • Electronic signature are defined as “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”.
  • An advanced electronic signature is one that should be uniquely linked to the signatory; capable of identifying the signatory; created using electronic signature creation data that the signatory can use under his/her sole control; and linked to the data signed in such a way that any later change in the data is detectable.
  • Qualified electronic signatures are similar to advanced electronic signatures, however they include additional security requirements – they are created by a qualified electronic creation device and they are based on a qualified certificate for electronic signatures.

Are e-signatures secure?

Some forms of electronic signature will be more secure and resilient to fraud, and therefore may carry greater evidential weight. There may be an increased risk of repudiation when using a simple electronic signature over an advanced electronic signature or qualified electronic signature.

However it is worth noting that wet-ink signatures carry many of the same risks in relation to repudiation. As noted above, an advanced electronic signature or qualified electronic signature is capable of providing a digital audit trail in relation to the signatory.

In short, electronic signatures are only as secure as the business processes, systems and technology used to create them.

Concerns and difficulties E-signature

  • Requirement for Consent: The counterparty to a contract must agree prior to the entry of the contract to an e-signature being used for the purposes of the execution of documents. While not obligatory, best practice remains to obtain express consent where possible.
  • Documents that must be executed by wet-ink signatures: It is not permissible to execute all types of documents, for example property documents, using e-signatures in Ireland.
  • Restriction on the use of an e-signature in a contract: When executing documents, it should be considered whether there is a contractual definition of “writing” in an agreement which may exclude e-signatures as means of execution of the documents.

Over the coming weeks and months, as we exist the Covid-19 crisis, the legal world is going to have to examine closely its interaction with electronic signatures, and the difficulties that have arisen during this trying time as a result of what appear to be some very archaic practices.

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The material contained in this post is for general information purposes only and does not constitute legal advice. Specific legal advice should be sought on any particular matter. No liability whatsoever is accepted by PF Solicitors for any action taken in reliance on the information in this post.