- An executor – being the person who physically or electronically applies a signature – is not implicitly authorised to use another person’s electronic signature if it was applied without that person’s knowledge or consent. This is similar to the situation where an executor forges another person’s handwritten signature.
- In this case, a director was not liable in circumstances where his failure to change a default password enabled another person to access and supposedly apply his electronic signature. However, it is possible that a person could demonstrate an intention to authorise another to apply their electronic signature if they took active steps to permit access to the means of applying that electronic signature (by, for example, circulating their password).
- Accordingly, where a contract is to be executed by an individual using an electronic signature, the accepting party can mitigate risk by considering whether additional steps should be taken to verify that the individual consented to their signature being applied. For example, in addition to having the execution witnessed, the individual could be required to confirm their execution by email.
- Courts will be unwilling to find that an unauthorised execution was ratified unless there is clear evidence that the person purportedly bound saw the document, appreciated its salient features, and then failed to take any remedial action. In this case, the court was sympathetic to the view that a person should not have to read each and every email and attachment in their inbox.
- By failing to change his default password, the Guarantor had impliedly authorised Brooks or any other person who received the login details from Brooks to execute the document on the Guarantor’s behalf (actual authorisation). Alternatively, even if there was not actual authorisation, the Guarantor had represented such authority to the Lender (ostensible authorisation).
- Even if the Guarantor did not actually authorise or represent authorisation, a number of circumstances (principally being sent a confirmation email) indicated that he had ratified the execution.
- While it was accepted that the confirmation email was sent to the Guarantor’s email address, the Lender failed to prove that the Guarantor had received and read the email, opened the attached document, and made himself aware of its salient features.
- It was not clear on its face that the attached document contained a guarantee because it was labelled ‘credit application’.
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