Compatibility with obligations
arising from membership of the European Union
57. The Department notes that both the European E-Commerce
and Electronic Signatures Directives impose on Member States requirements
not to create any legal impediments to electronic contracting.[27]
In its consultation document on the proposal, the Department
stated that, subject to the views of consultees (including the
Law Commission itself), it was its intention to take forward the
Law Commission's proposals as a coherent whole. Should the views
of consultees favour, or technical developments appear to make
necessary, legislative changes which had not been envisaged in
the draft proposal, the Department proposed to make use of order-making
powers under section 8 of the Electronic Communications Act 2000
(or other appropriate means) to give them effect. The Department
subsequently found that "there was widespread agreement with,
and no dissent from, this approach".[28]
58. In its commentary on the matter in the explanatory
statement, the Department notes in particular that its proposed
amendment to section 36A of the Companies Act 1985 would introduce
the requirement that directors of more than one company must sign
a deed or document separately for each company which is a party
to the agreement created in that document. It considers that
this requirement may apply to electronic contracts, in addition
to contracts established and recorded through the medium of conventional
documents (although it agreed in correspondence that this is a
question that only the courts can settle, and no such determination
of the issue has ever been made).[29]
Insofar as section 36A of the 1985 Act may apply to the execution
of electronic documents, no barrier to electronic contracting
would arise from the requirement to provide separate signatures.
We asked the Department whether the fact that multiple electronic
signatures would be required under paragraph 10 to Schedule 1
of its proposed Order would create any impediment to the making
of electronic contracts. In their answer, the Department argued
that no such impediment would be created by virtue of a requirement
to sign a document electronically several times.[30]
We agree.
59. Another point we asked the Department to consider
was whether its proposed amendment to the Law of Property Act
1925 requiring that witnesses to the signature of deeds and other
instruments shall also formally attest the signature would establish
any obstacle to electronic contracting in circumstances where
attestation of the signature might be from some remote location
by means of electronic conferencing, and whether any such difficulty
might contravene the E-Commerce Directive.
60. In its response, the Department reasoned that
the requirement to attest a signature could not be an obstacle
to the creation of electronic contracts, as such contracts could
be signed by means of a digital, scanned or typed signature.
It went on to acknowledge that the courts have never determined
whether it is possible for the remote witnessing of the signature
of a document by means of electronic conferencing equipment to
make it possible for a person witnessing the signature in that
way lawfully to attest the signature. It takes the view that
section 74(3) of the Law of Property Act 1925 requires the witness
of a signature to be physically present with the signatory. The
Department states "In so far as this may be an obstacle to
the electronic creation of deeds, it is not one introduced by
the proposed Order". This is clearly correct.
61. We are satisfied that the proposal does not
itself give rise to any incompatibility with obligations arising
from membership of the European Union.
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