There is no specific format for contracts under English law. They can be verbal, written or in any other format.
Five essentials
A hasty scribble on a serviette can form a legally-binding contract, providing it covers the five essential elements (English law):
- Offer to do something
- Acceptance of that offer
- Consideration i.e. something of value being exchanged
- Intention to create a legally binding agreement
- Certain terms.
So what about a digital contract? How do you cover acceptance (eg signing) and intent with an electronic format?
Digital contracts
A contract doesn’t need to be signed to be valid.
However signing is one of the best ways of proving the terms of your contract. Signatures are merely a form of confirming acceptance to a document – before widespread literacy, a simple cross or mark would be sufficient. Generally a wet-signed contract is one where a person signs using a pen on a hard copy (paper) contract.
Parties cannot argue that a contract is not enforceable simply because it was signed digitally!
Whilst certain documents do require specific forms of signing (like deeds) most do not. Electronic signatures and seals are both valid under English law, with a few exceptions.
Most online signatures fall into one of three categories:
- Simple – scanned or tick box (sometimes called an electronic signature)
- Advanced – uniquely linked to an identifiable signatory and irrevocable (a digital signature)
- Qualified – an advanced signature created on a qualified platform and based on a qualified certificate (trusted digital).
Typing your name or initials into a document and clicking submit is not a valid electronic signature, although the English common law is definitely grappling with the edges of this new practice. It recently upheld a typed name and automated email signature as valid.
Most documents are suitable for digital signatures except for wills, land registry documents or HMRC paperwork which is still required to the wet-signed. The gold standard of digital signatures requires authentication, integrity of signature (it cannot be altered) and an audit to show where the signature was created.
There are now many platforms, widgets and plug-ins which enable digital signing, the choice is yours!
What should you do?
Decide which of your transactions must remain paper-based and wet-signed. For everything else, use a system to sign (and then archive) your contracts digitally.
