11 Dec 2020

Practical considerations for the use of electronic signatures in Jersey

As the world navigates the challenges of COVID-19, demand for technologies such as electronic e-signatures is increasing significantly. As clients, businesses and public organisations implement home-working protocols in response to working from home guidance, flexibility in remote contract signings is becoming critical.

Regardless of current circumstances, electronic signature systems are widely used across the world especially in the context of business continuity and remote working, as well as enabling businesses to remain engaged with a range of (now remote) stakeholders including customers, suppliers and employees.

With the increased use of electronic signatures, we need to rethink the risks involved and our approach to seemingly routine procedures.

What does Jersey law say?

The primary legislation in Jersey is the Electronic Communications (Jersey) Law 2000, as amended in October 2019 by the Electronic Communications (Amendment of Law) (Jersey) Regulations 2019 (the “Law”).

An electronic signature under the Law is defined as: “a signature in electronic form attached to or logically associated with an electronic communication or electronic record”.

The Law stipulates that a person required by an enactment to provide a signature can meet that requirement electronically, and gives guidance on how the electronic signature should be provided. However, the Law does not contain a similar provision for commercial transactions (where an enactment does not require the signature).

Authority for the acceptance of an electronic signature in Jersey law might be found in article 2 of the Law, which stipulates that information shall not be denied legal effect, validity or enforceability, solely because it is in electronic form. ‘Information’ is defined to include data, text, sounds, images, codes, computer programs, software and databases. Although not expressly included, we would argue that an electronic signature would constitute information as defined.

In any event, the Law further provides that, in the formation of a contract, offer and acceptance may be expressed by means of electronic communication.

The details stipulated for the electronic signature required under an enactment, although not applicable to commercial transactions, are instructive:

  • The method of signature used must identify the person and indicate the person’s approval; and
  • The method of signature used must be as reliable as is appropriate for the purposes for which the information is communicated.

What are the commercial considerations?

  • Does the company’s constitutional documents allow for electronic signatures? If signing on behalf of a Jersey entity, you should check its constitutional documents to ascertain if electronic signatures are permitted – or at least not prohibited – on behalf of the entity, and for any requirements that an electronic signature must satisfy.
  • Are you authorised to sign and apply your electronic signature to the document? If so, you should be the one to insert your name or signature electronically (i.e. do not authorise someone else to this on your behalf). You should also be the person who sends the electronically signed document from your own email address that identifies you by name to the other parties.
  • Does the corporate authorisation allow electronic signature or specify the method of electronic signature? The relevant corporate authorisations must also be checked: the best practice will be for them to expressly refer to electronic signature of such document including the particular method of signature.
  • What does the agreement say? Is there anything in the contractual terms of the document(s) to be signed that prohibit electronic signatures? Does the agreement stipulate the method of electronic signature?
  • What does the law regulating the agreement say? Does the law regulating the agreement (if not Jersey) permit electronic signatures and doesn’t otherwise contain restrictions on the type of document that can be signed by way of electronic signature?
  • What is being signed? What method of electronic signature would be appropriate for the type of document being signed? Is the addition of a jpeg image sufficient for the kind of document being signed and the level of risk involved? Where electronic signature technology is being used, is the standard level of authentication offered by such methods as DocuSign or other similar platforms of electronic signature appropriate? Or should additional and more resilient levels of authentication, such as SMS authentication, PIN Numbers or passwords, be considered?
  • Do all the parties need to sign in the same way? Unless the agreement provides otherwise, not all parties need to sign using electronic signatures.  Some parties can sign in wet ink while others sign electronically; however, the original executed document will have to be compiled of the counterparts of each party’s signed document.
  • Does the document need to be witnessed? If a Jersey power of attorney is to be granted by a natural person who is to execute by electronic signature, a revised direction of the Royal Court of Jersey stated that witnessing by video conference is acceptable, subject to the conditions and caveats set out in that direction. In the case of a company whose articles of association require its sealing, or signing to be witnessed, a witness must be physically present at that signing or sealing. It may be worth considering an amendment to such articles to remove any requirement for sealing or for signing to be witnessed.
  • Have the parties agreed on the signature process? Thought should be given not only to the mode of electronic signature, but also the process of signature. For example, whether it is sufficient for a signatory to return the signature page only, or the executed signature page together with the agreed form of the agreement, and does the conformed copy of the agreement need to include the whole document returned by each signatory, or can the conformed copy consist of the original form of agreement with each signatory’s executed signatory page?

Summary

It is important to determine early in the process of any commercial transaction how the parties intend to sign, including the process to be followed. The parties may want to include specific provisions in the agreement for the method and process of signature, including a limitation of the risks involved. Now is the time to update old boiler-plate signature clauses, and ensure that the necessary processes are in place to protect your company’s interests. 

Contact us if you need to review your standard agreements or need further advice.