The current pandemic and subsequent social distancing rules and the lockdown have placed an increased focus on the ability to conduct non-face to face transactional closings, as traditional processes are unable to continue.
Given the current uncertainty regarding how long the lockdown and social distancing measures will remain in place, parties are considering virtual execution, including the use of e-signatures as a practical means for completing transactions in a timely manner.
What is an Electronic Signature or E-Signature?
The EU Electronic Identification and Trust Services for Electronic Transactions in the Internal Market Regulation 2014 defines an electronic signature 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”.
Applicable Laws in Ireland
Electronic signatures or e-signatures have been legally recognised in Ireland since the introduction of the Electronic Commerce Act 2000 (the “E-Commerce Act”).
In addition the use of electronic signatures is also governed by the EU Electronic Identification and Trust Services for Electronic Transactions in the Internal Market Regulation 2014 (the “eIDAS Regulation”).
The eIDAS Regulation has direct effect under the laws of all EU member states since 1 July 2016. However, the eIDAS Regulation does not affect national or EU Law relating to the conclusion or the validity of contracts or other legal documents relating to their form.
Generally, where a person or a public body is required to provide a signature on documents, an electronic signature can be used. However, the E-Commerce Act provides that e-signatures cannot be used on certain categories of documents such as:
- statutory/sworn declarations and affidavits;
- wills, codicils or any other testamentary instruments to which the Succession Act 1965 applies;
- creation of specific trusts where the manner of execution is provided by the Statute of Frauds;
- enduring powers of attorney;
- documents required under the rules and practices or procedures of a court or tribunal.
Whilst the E-Commerce Act provides for the execution of a contract for the sale of land electronically, any document which creates, acquires or disposes of an interest in real property (including an leasehold interest) must be evidenced in wet-ink originals. Furthermore, the Property Registration Authority requires certain documents (such as a deed of transfer) to be delivered as wet-ink originals.
Types of E-Signatures
The eIDAS Regulation recognises three levels of e-signature:
Simple Electronic Signature (“SES”)
SES can be a type written name on a signature block, or a scanned signature. Generally, the SES are used for signing letters, resolutions, or issuing notices.
Advanced Electronic Signatures (“AES”)
AES are more digitally advanced e-signatures which are uniquely linked to the signatory. They involve the encryption of an electronic document using a code (similar to a PIN number) which is unique to the signatory. The document can only be de-crypted and signed by the signatory.
Qualified Electronic Signature (“QES”)
Although not commonly used in Ireland, QES is a signature that is created by a qualified electronic creation device and based on a qualified certificate for e-signatures.
Whilst the SES can also be used for signing agreements and contracts, it is recommended that where possible AES be used, as it has additional security features to ensure that all parties sign the same document.
Key Requirement of Consent
The E-Commerce Act requires that the person or public body receiving an electronically signed document must have consented (such as by way of email exchange) to it being electronically signed. There is no requirement in the E-Commerce Act that the consent be explicit, therefore consent can be implied. However, it is recommended that express consent that an e-signature is being used for the execution of documents be obtained prior to the entry of same.
This article is limited to the position under the laws of Ireland as of May 2020 and does not cover agreements entered into between corporate entities and consumers. Caution should be adherent to where agreements have been entered into under the laws or regimes of separate jurisdictions.
Professional advice should always be taken before acting on any of the matters discussed. Please contact a member of our team should you wish to discuss this topic further.