eSignature Legality in Scotland

eSignature Legality Summary

The basic position in Scotland is that a written signature is not required to form a contract. Contracts are generally valid if legally competent parties reach an agreement, whether they agree verbally, electronically or in a physical paper document. As such, any electronic signature is capable of forming most contractual obligations under Scots law.

In Scotland, there are specific requirements in relation to the validity, presumption of self-proving status and registration of documents relating to certain types of transaction. These are defined in the Requirements of Writing (Scotland) Act 1995 (the “1995 Act”) as:

• the constitution of:

  • a contract or unilateral obligation for the creation transfer, variation or extinction of a real right in land;

  • a gratuitous unilateral obligation except an obligation undertaken in the course of business; and

  • a trust whereby a person declares himself to be a sole trustee of his own property or any property he may acquire;

• the creation, transfer, variation or extinction of a real right in land otherwise than by the operation of a court decree, enactment or rule of law;

• the constitution of an agreement under s66(1) of the Land Registration (Scotland) Act 2012 (an agreement between proprietors to vary the boundary of adjacent plots of land); and

• the making of any will, testamentary trust disposition and settlement or codicil.

In this section of the Guide, we refer to these documents as “Formal Documents”.

The 1995 Act was amended in 2014 to include a new section dealing with the execution or authentication of electronic documents. These amendments were made primarily to enable the electronic execution and exchange of conveyancing documents for real estate transactions.

Under Part 3 of the 1995 Act and The Electronic Documents (Scotland) Regulations 2014 (the “2014 Regulations”), an AES[1] is required to validly authenticate a Formal Document in electronic form. The exception to this is in relation to a will, testamentary trust disposition and settlement or codicil, in respect of which the provisions permitting electronic execution have not yet been brought into force. Until that provision comes into force, such documents must always be executed using a wet ink signature.

Witnessing/self-proving status

Under the 1995 Act, any document written on paper, parchment or another tangible surface is ‘probative’ (presumed to have been signed by the granter) where it has been signed by a person as a witness to subscription by the granter.

While there is no legal requirement to do so, it is therefore common practice in Scotland for contracts and other documents to be witnessed so that the document is probative.

The provisions of the 1995 Act dealing with probativity by way of witnessing apply only to documents that are written on a tangible surface. The 1995 Act does not give a witnessed electronic signature self-proving status.

Under the 1995 Act and the 2014 Regulations, an electronic document can be probative but only where it has been authenticated with a QES[2].

Registration in the Books of Council and Session and the Land Register

The Books of Council & Session are a register used for the preservation of documents and deeds and for diligence purposes. The majority of documents presented for registration in the Books of Council and Session relate to short term leases or are powers of attorney.

The 2014 Regulations state that in order for an electronic document to be capable of registration in the Books of Council and Session or the Land Register or recorded in the Register of Sasines, the electronic document must be presumed self-proving (i.e. it must have been authenticated using a QES).

Use Cases for Standard Electronic Signature (SES)

Use cases where an SES is typically appropriate include:

• certain HR documents, such employment contracts, NDAs, employee invention agreements, privacy notices, benefits paperwork and other new employee onboarding processes;

• commercial agreements between corporate entities, including NDAs, purchase orders, order acknowledgements, invoices, other procurement documents, sales agreements, distribution agreements, service agreements and software licence agreements;

• consumer agreements, including new retail account opening documents, sales terms, services terms, software licenses, purchase orders, order confirmations, invoices, user manuals and policies, but excluding consumer loan agreements; and

• residential and commercial lease agreements (other than where the parties wish to register the lease).

Use Cases That Are Not Typically Appropriate for Electronic Signatures or Digital Transaction Management

Use cases that are specifically barred from digital or electronic processes or that include explicit requirements, such as handwritten (e.g. wet ink) signatures or formal notarial process that are not usually compatible with electronic signatures or digital transaction management:

• Formal Documents including contracts for the transfer of land. These must be authenticated using an AES in order to be valid, or a QES where registration is required;

• the making of any will, testamentary trust disposition and settlement or codicil. It is not possible to authenticate such documents electronically;

• documents that the parties wish to be probative, where a QES must be used;

• standard securities – a fixed charge over real estate in Scotland (a standard security) has to be registered in the Land Register and, where granted by a company or an LLP, is perfected by registration at Companies House. However, as the charge requires to be registered in the Land Register and only electronic documents authenticated using a QES issued by Registers of Scotland under the ARTL System are currently accepted for registration, it is not currently possible to electronically sign charges over real estate using a SES;

• documents for Revenue Scotland where Land and Buildings Transaction Tax (LBTT) is payable, which must be submitted in paper form;

• some documents such as company accounts to be registered with Companies House outside its web-filing service, which must be submitted in paper form;

• an assignation of a patent or patent application, which must be on paper or parchment and signed at the end of the last page;

• where it is intended to register the document in the Books of Council and Session or the Land Register or recorded in the Register of Sasines. In order for a document to be registered or recorded, it must be authenticated with a QES; and

• where a contract written under Scots law is likely to be relied upon or enforced in a jurisdiction that does not recognise electronic signatures.

Local Technology Standards

Scotland defines different classes of electronic signatures, as specified in Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC (the “eIDAS Regulation”), including a QES.

If an electronic document is authenticated with a QES (regardless of the technology used), that gives it ‘probative’ status under Scots law, meaning the document is presumed to be validly executed and does not require the leading of any evidence to establish its validity in court. Any person challenging its validity would need to lead evidence that its appearance was misleading and it had not, in fact, been validly executed. In spite of this, a non-QES electronic signature can still be submitted as evidence in court in Scotland. However, if the validity of that signature is challenged, then the party presenting would need to provide sufficient evidence to establish that it is valid.

[1] An AES is an “advanced electronic signature”, a type of electronic signature that meets the following requirements: (a) it is uniquely linked to the signatory; (b) it is capable of identifying the signatory; (c) it is created using means that are under the signatory’s sole control; and (d) it is linked to other electronic data in such a way that any alteration to the said data can be detected.

[2] A QES is a specific digital signature implementation that has met the particular specifications of a government, including using a secure signature creation device, and been certified as ‘qualified’ by either that government or a party contracted by that government.