With the United Kingdom officially on government-mandated lockdown and the vast majority of people ordered to work from home, the logistics of executing documents have become increasingly difficult. Signatories may not have access to printers and scanners, or may not be able to congregate to ensure signatures are validly witnessed. Read below for guidance on how to ensure due and effective execution under English law.
Under English law, while not all contracts need to be written down, nor do they even need to be signed in many cases, in practice most commercial contracts are in writing and require some form of signature or execution to be effective. It is these contracts that are dealt with in this note.
1. simple contracts; and
Simple contracts are in most cases very easy to execute even during lockdown. Under English law, pretty much any method used by a signatory to indicate and authenticate their intention to be bound can constitute a “signature”, including simply typing their name into a signature block of a soft copy version or even confirming in an email that contains an auto-generated email signature with the sender’s name.
Nevertheless, in most transactions involving legal advisers, you will still be asked to “sign” documents in a more traditional sense. In that case, you can use either of the following methods from your home working environment:
The latter methods can still be used even if you do not have access to a printer and/or a scanner. There are mobile phone-based applications such as Acrobat (by Adobe) that can be used to create and insert e-signatures into documents you receive by email (if you have neither printer nor scanner), while Scanner Pro (by Readdle) allows you to create PDFs from photographs of documents you have been able to print and sign but have no other ability to scan back. As mentioned above, DocuSign and other web-based businesses provide similar functionality but with additional security, document storage and other features as well.
Where documents are required to be executed as a deed, there are additional execution formalities needed beyond a simple signature and it is these requirements that can cause particular logistical issues in the current lockdown.
The applicable execution formalities differ according to the type of party executing. Most parties will either be individuals or companies and this note focuses on these two types.
Individuals execute deeds by signing them in the presence of a witness who “attests” the signature. Deeds can be executed by an attorney on an individual’s behalf but that attorney must also execute using the requisite formalities depending on whether that attorney is itself an individual or a company.
Compliance with these requirements is therefore particularly difficult where people are practicing social distancing as at least two people are required to be present at the time the deed is executed. Relatively recent case law has also made clear that adding a pre-signed signature page to a deed is not valid. The document being executed has to be in final form at the time of execution and cannot subsequently be amended without being re-executed.
How can the signatory sign? As for simple contracts, the signatory can sign using a wet ink signature if they have access to a printer to print out the document or they can sign using an electronic signature. However, you must wait for your witness to be present before you use either of these methods.
Who can be a witness? Almost anyone can in theory witness a signatory’s signature - there is no legal requirement for them to be independent - but given that the added formalities of a deed are in place in order to provide unbiased evidence of a person’s willingness to enter into the transaction, it is best practice for the witness not to be a spouse, family member or minor. That said, in the current lockdown, our experience is that counterparties and their counsel are accepting spouses and adult family members as acceptable witnesses.
Do note, however, that a party to the same deed cannot act as a witness to another party’s signature so, where an individual is executing the deed in their own right, they cannot also witness another party’s signature (including a director’s signature on behalf of a company – see below).
How can they witness? The law is clear that the witness does need to be physically present when the signatory signs the document and that this cannot be done via video call or equivalent. So, while the witness’s signature can be electronic, their presence must be physical.
Given the social distancing requirement, the witness should stand at least two metres away, watch the signatory sign (electronically or manually) and then:
English companies would typically execute a deed in one of the following four ways:
(1) by affixing the company’s common seal;
(2) by the signature of either two directors or one director and the company secretary;
(3) by the signature of one director in the presence of a witness who attests that director's signature; or
(4) by someone acting as duly appointed attorney for the company.
All but the first option therefore require at least two people to execute the document and so, as for individuals, the logistics are made more difficult in the current lockdown (as mentioned above, the execution by an attorney must adhere to the formalities applicable to companies or individuals depending on whether the attorney is itself a company or an individual).
(1) Affixing a company seal
In recent years, the use of company seals has declined but, if you envisage your company having to execute a large number of deeds during the lockdown, it may be a good time to order one. They can be sourced on Amazon.
The company’s full corporate name will need to be legibly engraved on the seal in order for it to be valid. You should check the articles of association of the company to ensure that any use of a company seal is in accordance with its provisions. In addition, it would be prudent to pass a board resolution (which can usually be done by telephone or email) documenting the decision to purchase and use a company seal and who is authorised to use it. You should store the seal securely (e.g. in a safe) to prevent misuse and maintain a record of when the seal is used.
Please note that, where the deed in question involves any form of purchase from or other transfer by the company, the use of a seal without there being two directors (or a director and company secretary) present and “attesting” the affixing of the seal would mean that the purchasing party or parties to the deed will not be able to rely on a statutory presumption of due execution by the company. In those cases, you may find that those other parties and/or their legal advisers will request that you to use one of the alternative methods outlined below. Accordingly, if you are intending to use a company seal to execute a document, it is worth checking in advance with your counterparties or their legal advisers whether they are happy for you to do so.
(2) Two authorised signatories
While the lockdown continues, it is unlikely that two authorised signatories of a company (for this purpose that means either two directors or one director and the company secretary) will be physically present in the same room. If the two authorised signatories both have printers or scanners or applications that otherwise allow them to electronically sign, such that they can both get a signature on the same counterpart PDF, then this route is fine. However, where they do not, we consider that it is not best practice to have the two authorised signatories signing different counterparts. Instead, we would recommend that the following (one director in front of a witness) method is used.
(3) Director in front of a witness
A director may execute in the presence of a witness who attests the signature. Please follow the guidance above for signing by individuals and witnesses.
As mentioned above, an attorney will usually itself be either a company or an individual. If the attorney is a company, then one of the methods already mentioned above will need to be used.
Is a deed required?
A way to avoid all these formalities that usually require two people to be together to execute a document as a deed would be to avoid the document being executed as a deed in the first place. Under English law most documents do not need to be deeds, other than transfers of land or interests in land, some leases, some mortgages and charges, sales by mortgagees and powers of attorney. Indeed, many documents not falling within these categories but purporting to be deeds have still been enforced by the courts as valid (simple) contracts even where incorrectly executed.
Documents may be prepared as deeds because there is a lack of “consideration” (i.e. some form of payment or other value being provided by one or other of the parties) or because the parties are seeking a longer limitation period (usually twelve years for deeds as opposed to six years in the case of simple contracts). In the case of the former, it may be relatively easy to amend the contract to provide some form of nominal consideration (e.g. a payment of £1) to avoid the contract needing to be a deed, and this may well be money well spent in terms of preventing logistical issues with execution.
Another potential option would be to choose a different governing law where that other law does not insist on the same execution formalities. However, you would be well advised to seek local law advice so this route is likely only sensible for cross-border deals where non-English lawyers are already advising.
The importance of planning ahead cannot be overemphasised to ensure that all parties consider the execution logistics and tailor the relevant execution blocks to reflect the signing method proposed to be used.
To the extent that use of a deed is mandatory (e.g. transfers of land, powers of attorney, etc.), or you are entering into contracts with associated registration and/filing requirements, or your deal requires execution by a foreign company or other forms of entity (e.g. limited partnerships or LLPs), please reach out to your usual MoFo contact so that we can assist in ensuring that all necessary formalities are observed. Given the scope for getting this wrong and the importance of getting it right, please do not hesitate to get in touch for further guidance.
 It should be noted that HM Land Registry requires documents submitted for registration to have been executed with wet ink signatures and HMRC usually requires the same for documents on which stamp duty is payable. Please, however, note that HMRC will accept e-signatures while coronavirus (COVID-19) measures are in place. HM Land Registry has not (yet) implemented a similar temporary dispensation.