Executing documents electronically

Many people who work from home can simply print off documents, sign them with a pen, and then scan them from their home office. However, if that is not an option then you may need to consider electronic execution. This is a slightly nebulous term that covers a number of different things including (1) copy-pasting a digital copy of your signature into the document (sometimes called “clipping”); (2) using password or token based "document signing" software such as DocuSign to indicate approval of a contract; or (3) assenting to a document by sending an email or other indication of acceptance of the terms.

The law in this area can be quite complicated, and both BVI and Cayman have lengthy Electronic Transaction statutes which cause some people to tie themselves in intellectual knots over the statutory requirements. Happily, however, we can largely ignore those statutes as the underlying common law rules (which both statutes preserve) are considerably more flexible. For simple contracts any of the above three methods will normally work and be considered valid execution of the contract so long as they indicate the positive assent of the signatory to the specific terms (subject to certain exceptions, including those we mention below).

The slightly complex area is for contracts which need to be formally executed as a deed (sometimes referred to as "contracts under seal" or "specialty contracts"). In such cases we need to distinguish between when one person executes on behalf of a company as a director, or when one executes as an individual (either for their own sake, or in their capacity as trustee or partner in a partnership).

• For BVI and Cayman companies, either clipping or using document signing software will be effective to execute a document as a deed by the signature of a director or other authorised person. Although it is possible that the third method (email assent) may also work – there are cases which clearly hold that sending an email can amount to a ‘signature’ in law – we do not recommend it.
• However, when executing a document as an individual, BVI and Cayman law require that the signature must be witnessed. Based on guidance from the UK Law Commission on the common law rules, it is acceptable for the signature to be electronic (and for the witness to also attest electronically), but both parties must be in the same room. Incidentally, this also applies to execution on behalf of a company by affixing the common seal – the affixing and the attestation must happen at the same physical location.

As mentioned above, there are a number of exceptions and reservations to be aware of. Doubts have been expressed with respect to whether bills of exchange (including promissory notes) can be executed in this manner, and so we don’t recommend doing so. Also bear in mind that if the document is required to be filed at a Registry or other Governmental office they may have separate rules to comply with in relation to electronic signatures (if they accept them at all). Similarly, electronic signatures present complexities if you need them to be notarised (Cayman has a special system relating to notarisation of electronic documents; as yet BVI does not). And, if your document is subject to stamp duty in any jurisdiction, it may have to be reduced to physical form to enable stamp duty to be assessed.

Finally, you also need to bear in mind that although we have described the procedures and rules relating to BVI and Cayman law, where the underlying document is governed by a foreign law, you also need to make sure you comply with the requirements of that foreign law.

If you have any questions or concerns, please don’t hesitate to speak to your usual Harneys contact or one of the authors.