Documents executed by email - further guidance from the Law Society

23/02/2010

The Law Society has recently published a practice note relating to the execution of documents at virtual signings or closings: "Execution of documents by virtual means".

You may recall from our previous article "Are Signing Meetings Back?" (27/05/2010) that the Mercury Tax Case raised considerable concerns amongst lawyers as to how completion meetings should be conducted. If documents were to be properly and validly executed was it essential to hold completion meetings in person or could signings by email be sufficient?

The recent practice note is intended to assist parties who wish to take a "cautious approach" to virtual signing in light of the Mercury Tax case. The note largely follows guidance published by a joint working party of The Law Society Company Law Committee and The City of London Law Society Company and Financial Law Committees (the "Joint Working Party Guidance"). The note suggests three (non-exhaustive) options for virtual closings:

1. returning by e-mail the entire document and signed signature page;


2. returning by e-mail only the signed signature page;


3. creating a pre-signed signature page in advance of finalising the document.

The option chosen will depend on the type of document in question and statutory and legal requirements as to their execution. The most prudent approach in relation to the execution of a deed at a virtual closing, for example, would be to use option 1. A simple contract, on the other hand, can generally be formed without signature (whilst not always recommended) provided the essential elements of a contract are present.

Any of the three options outlined above could, in theory, be used. However, the different level of risk of each option should be balanced against any potential evidential problems. If using option three, for example, there should be clear evidence, such as an exchange of emails, that the signatories, their lawyers or someone else authorised by the signatory have authorised the attachment of their signatures to the final version of the relevant contract.

In relation to 'wet-ink' originals for registration purposes, the note goes beyond the Joint Working Party Guidance, pointing out that a virtual signing or closing is very unlikely to be appropriate for property documents requiring registrations: solicitors responsible for carrying out the relevant registration would require the other parties' solicitors to undertake to send them the 'wet-ink' signed parts of the documents but may be unwilling to rely on the other parties' undertakings. The note further clarifies that solicitors should only give such undertakings when they are actually holding the 'wet-ink' signed documents, "not when they have merely seen electronic images of them".

For more information please see the Law Society website - Execution of documents at virtual signings or closings - 16 February 2010 and R (on the Application of Mercury Tax Group Limited and another) v. HMRC [2008] EWHC 2721 (Admin)

Contact: maustin@city-law.net;ritapadam@city-law.net

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