Tuesday, July 05, 2011

Virtual execution of documents under Irish law

There's been quite a bit written about the electronic signature of contracts, and under Irish law there are specific statutory rules in place under Part 2 of the Electronic Commerce Act 2000 which allow such signatures to be used. Curiously, however, there's been much less attention paid to a more traditional form of "virtual signing" - where one or more parties to a transaction are not physically present at the meeting where a particular document is executed.

In these situations the practice had developed of either executing signature pages in advance or signing a document remotely and subsequently distributing signature pages by fax or email. This practice, however, hit a road bump with the decision of the High Court of England and Wales in Mercury Tax Group v. HMRC which held that a signature given in respect of an incomplete draft deed could not be transferred to an amended final deed, as s. 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 requires that "the signature and attestation must form part of the same physical document... which constitutes the deed".

Although obiter, this finding had obvious wider implications for virtual signatures generally in any situation where statutory requirements for signatures must be met. Consequently, it was followed by a practice note from the Law Society of England and Wales (January 2010) and now by a practice note from the Law Society of Ireland (June 2011, PDF, pp. 52-53).

The whole Law Society guidance note is very useful and must be read, but it helpfully summarises the options as follows:
Option
Steps
Documents
Option 1 (return the entire PDF/ Word document and a PDF of the signed signature page)
• Once the documents have been agreed, final execution versions are emailed to the parties and/or their lawyers.
• For convenience, a separate extracted signature page may also be attached to the email, but this is not necessary.
• Each authorised signatory prints and signs the signature page. If appropriate, the signing may need to take place in the presence of a witness.
 • The signature page is then scanned and returned by email together with the whole document previously emailed to the signatory. (For a deed, make it clear when delivery is to occur.)
• See suggested wording for covering email (panel, p53)
Option 1 may be used for any document or deed, i.e. including:
• A deed,
• A real estate contract,
• A guarantee (whether a deed or in simple contract form),
• A simple contract.
Option 2 (return the entire PDF/ Word document and a PDF of the signed signature page)
• Once the documents have been agreed, final execution versions are emailed to the parties and/or their lawyers.
• For convenience, a separate extracted signature page may also be attached to the email, but this is not necessary.
 • Each authorised signatory prints and signs the signature page.
• The signature page is then scanned and returned by email, together with authority for it to be attached to the final approved version of the document. (The degree of formality required for this authority will depend on the circumstances.)
Option 2 may be used for:
• A guarantee (in simple contract form only),
• A simple contract
 • A real estate contract.

Option 2 may not be used for a deed (of any type).
Option 3 (return the entire PDF/ Word document and a PDF of the signed signature page)
• Once the documents have been agreed, final execution versions are emailed to the parties and/or their lawyers.
• For convenience, a separate extracted signature page may also be attached to the email, but this is not necessary.
 • Each authorised signatory prints and signs the signature page.
• The signature page is then scanned and returned by email, together with authority for it to be attached to the final approved version of the document. (The degree of formality required for this authority will depend on the circumstances.)
Option 3 may be used for:
• A guarantee (in simple contract form only),
• A simple contract,
• A real estate contract.

Option 3 may not be used for a deed (of any type).

There is also an important caveat that for registration purposes "wet ink" versions of all signatures may be required - if so, the guidance note points out that appropriate undertakings must be included that these will be provided following execution.

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