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DocuSign: Making signing contracts easier and (sometimes) more complex…

Electronic execution, and execution via DocuSign in particular, is the ‘new normal’ for the execution of contracts post-Covid. When signing using DocuSign goes right, contracts can be executed quickly, easily and from any location with internet access. When signing goes wrong, it can be an awkward process to rectify issues, particularly where there is time pressure. In this article we consider a few examples where signing via DocuSign has gone wrong and how these issues can be avoided. Please note that our comments relate to how Docusign is used in practice for signing and not the platform itself.

Issue 1: Witness not in the presence of the signatory when the relevant document is a deed

Detail: In order for a deed to be validly executed, a witness must be physically present with a signatory at the time of signing and must observe the signing process (witnessing by video call is also not acceptable).

Each DocuSign envelope (the electronic ‘container’ holding the documents sent for signature) circulated using DocuSign comes with a Certificate of Completion (CoC) providing identifying information about the envelope and details of the envelope events (e.g. that a document has been viewed or signed).

It is not uncommon when reviewing DocuSign’s CoC, to see that the witness and signatory were not in each other’s physical presence from the time/date stamp or the location/ISP address of the witness and signatory.

Impact: If a document has not been correctly executed as a deed, it may still take effect as a ‘simple’ contract provided that: (i) it is valid as a ‘simple’ contract (including that consideration moved between the parties); (ii) there is no legal requirement for the contract to be made as a deed; and (iii) the signatories to the document had the necessary authority to sign a ‘simple’ contract. If these requirements are not met, the contract may not be enforceable.

Solution: Ensure the requirements for witnessing are communicated clearly to the signatories and their witnesses prior to signing.

Issue 2: Witnesses are able to view documents from their devices when signing a document

Detail: By default, a witness can view all of the documents in an envelope when they are signing; after signing, they can no longer view any of the documents.

Impact: This may be an issue when there is private/commercially sensitive/confidential information contained in a document and where there may be concerns about the discreetness of witnesses.

Solution: Choose witnesses carefully noting that witnesses should be independent (i.e. unconnected to the parties, not a party to the deed nor someone who benefits from it). It is best practice for witnesses to be over the age of 18 and not a family member and it is recommended that witnesses reside in the UK.¹

It is also possible to restrict access to whole documents within an envelope via the Document Visibility function (at the document level, not the page level). So, if a witness needs to be restricted to see only certain pages, such as a signature page, that page or pages can be made a separate document. However, this is not an ideal solution for evidentiary reasons.

Issue 3: DocuSign automatically adding date signed

Detail: A number of standard fields can be added to a document (signature, name, text, etc.). Where ‘Date Signed’ is added as a standard field, the field is automatically filled in with the date on which the relevant signatory signs/accesses the document.

Impact: This can cause issues where the document is accessed for dating after the date on which it was signed (e.g. the completion date of a transaction) as the document will automatically populate the field with the current date.

Solution: Where the date on which the agreement is made is important, consider having the date boxes completed with a standard text field, allowing a user to enter free-form text (in this case, to manually input the date on which the agreement was executed).

Issue 4: Cross-referencing errors

Detail: If a document has been drafted in Word and contains many cross-references, there is a risk that the PDF version of the document produced by DocuSign will show the “Error! Reference Source Not Found” message if there are any broken cross-references.

Impact: If the document is signed with missing cross-references, those cross-references will need to be identified and amendments should be made to correct the cross-referencing in accordance with any variation clause.

Solution: Best practice would be to check all cross-references in the document before uploading it to DocuSign and re-creating cross-references where there are any error messages. If the parties are confident that all cross-referencing is correct, the option ‘Update fields before printing’ under File -> Options -> Display can also be unticked.

If you require further information on signing contracts, please contact Greenwoods’ corporate and commercial team.

 

¹ Whilst a witness not satisfying this criteria (over the age of 18, not a family member and residing in the UK.¹) may be acceptable from a legal perspective, a witness to a signature may be required to testify that the document was signed by the signatory in their presence. The veracity of the evidence presented by a witness may be diminished if the person is closely related to the signatory and/or is a minor. It may also be more problematic tracing a witness overseas than a UK resident.

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