The government’s restrictions imposed in response to the Covid-19 pandemic have raised a number of practical difficulties for parties when signing documents. In the first part of this article we examined the options available when signing contracts remotely. In this second part we consider a recommended approach to remote or virtual signings.
Background
The practice of "virtual” signings and closings is well established where documents are executed "remotely" and transactions completed without the parties meeting in one place. The majority of corporate transactions take place as remote completions with documentation being emailed, printed, signed and scanned remotely instead of being signed by the parties physically present in the same room.
Guidance notes on the practice and protocol have been published most recently by The Law Society to facilitate such arrangements.
Options
The Law Society guidance outlines three options available to parties and advisers when looking to sign documents and complete transactions remotely. The choice of option will depend on the type of document in question as different statutory and legal arrangements apply concerning the formality of their creation. The options are as follows:
Return by e-mail the entire document and the signed signature page
Return by e-mail only the signed signature page
Create a pre-signed signature page in advance of finalising the document
The approach to be taken will depend on the nature of the documents being signed and whether they are simple contracts or deeds.
Deeds
A recommended approach for the signing of a deed is as follows:
A complete final version of the document in PDF or word form (we recommend PDF) together with a separate PDF of the signature page should be sent by email to the relevant signatories with a together with a request that the signatories:
print the document or just the signature page (helpful in the case of particularly lengthy documents)
sign the signature page complying with necessary witnessing formalities (see May newsletter).
The signatories should email back both:
the complete final version of the document; and
the validly executed signature page
That email and its attachments will constitute the original duly executed document.
Particular care must be taken when signing deeds, as specific rules apply concerning their execution, witnessing and delivery (evidencing an intention to be bound by the document). It should also be remembered that original “wet ink” signature versions of documents may be required for post-completion registrations at the Land Registry or Companies Registry (e.g. in the case of land transfers, leases or charges). This may require solicitors to provide undertakings to deliver wet ink originals in due course. Under current pandemic government restrictions that may be problematic for a law firm and it follows that virtual completions may not be possible for all transactions.
Simple Contracts
The procedure recommended for deeds described above is the preferable option but it would also be acceptable to email to the signatories a PDF or word version of the final document and for the signatory to email back the signed signature page only.
The signatory’s email should contain their express authority for the recipient to attach the signature page to the final contract.
Practical Considerations
Co-ordination
Signatories should:be given sufficient notice of the signing arrangements and confirm that they are satisfied with the approach
be clear on how electronic devices may be used (e.g. what applications must be downloaded)
check permissions under their internal policies and constitutional documents on the use of those applications and the proposed signing arrangements (particularly where the transaction involves parties in another jurisdiction).
Electronic signatures
These were the subject of our previous article and are a valid means of executing documents (including deeds). Electronic signatures should not however be used for deeds dealing with dispositions of real estate.Mobile devices
A signatory can use a smartphones or other mobile device to sign documents.Cross border transactions
If the transaction involves parties from other jurisdictions then the documents may need to be notarized and apostilled. A notary authenticates the execution of certain documents and an apostille is a certificate certifying the genuineness of the notary's signature. Notarisation can require physical attendance by signatories and the parties should confirm the signing proposals with the notary and local counsel beforehand.
Closing thoughts
Provided that signatories have access to the relevant devices and equipment (e.g. printer and a scanner), parties should be able to continue to follow the existing transaction protocol for the virtual signings. The government’s recent qualified relaxation on the witnessing of signatures has been a helpful addition to the protocol.
