In the wake of the COVID-19 pandemic, in-person meetings and human interactions in closed spaces have become prohibitive in the global environment. As it is customary in Mexico to hold a meeting with the parties in a conference room, the new reality impacts usual procedures for closing transactions.
Electronic signatures and "wet" signatures (under the below mechanics) are two possible solutions when in-person meetings are not possible.
Electronic Signature (e-signature)
Under Mexican law, parties can grant consent verbally, by written form, by electronic means, by optical means or through other technology, among other forms.1 All of these means for granting consent have the same legal effects to a "wet" signature.2 Some types of agreements require certain additional formalities to be enforceable, such as notarization, but most agreements do not require additional formalities to be valid as long as there is consent. Commercial transactions which require by law that the formality of agreements be executed through a "wet" signature, the Commerce Code permits the use of electronic means, identified as data messages and e-signatures in the Commerce Code.
Mexican law recognizes different types of e-signatures, some of which more sophisticated than others. Among the e-signatures, we have the simple e-signature and the advanced e-signature. The simple e-signature has some complementary features such as biometric or geolocation data, to be able to identify the signing party and is used in commercial transactions. This kind of signature is used from personal devices and accounts. The advanced e-signature consists of the application of a mathematical algorithm to a graphic representation of the name of an individual or entity. The process is developed by a program or software that performs various validations and grants legal validity to the legal performed using such signature. These types of signatures are usually controlled or administered by governmental authorities. However, implementing complex e-signatures as it is the case of the advanced e-signature, or asking for certifications, could be troublesome and not cost-efficient.
As a preferred alternative, the following are the essential requirements for an e-signature to be considered valid:
- Must be adequate to clearly identify the owner of the e-signature and to link such signature to the electronic agreement.3 Some examples of means through which the consent can be linked to a specific individual are: (i) taking a picture of the individual; (ii) using the fingerprint as a fashion of granting his/her consent, and (iii) asking the individual to provide certain personal information (g., ID number, birth date, tax ID, citizenship number, etc.).
- Must be reliable. The e-signature creation data must relate exclusively to the signatory and must be under the exclusive control of the signatory at the moment of signing.
- After it has been signed using an e-signature, it is possible to detect any alteration to the e-signature and any alteration to the integrity of the data message.
- The information contained in the e-signature must maintain its integrity and it shall be accessible for further consultation.
- The electronic information must be unaltered and must be available for review at any time.4 This is also important for future evidentiary value and an expert witness opinion in court.
From a litigation standpoint, e-signatures: (i) are admissible as evidence in court5, as long as electronic data contained therein or in a data message attached thereto can be logically associated by any technology, and (ii) are capable of evidencing that the signatory approves the information contained in the data message. The Federal Code of Civil Procedures and the Commerce Code both accept that electronic agreements have evidentiary value in a litigation procedure.6
E-signature Implementation with DocuSign
Recognizing the fact that some signatures at a pre-closing or closing stage are requested via electronic means (e.g., email) and that the process for returning these (print, sign, scan) in most cases is manual, an acceptable option may be to use DocuSign or other web-based application. Mayer Brown encourages parties to use these tools. DocuSign is a cloud-based workflow tool that enables to streamline the gathering of signatures by electronic means that works as follows:
- Mayer Brown will upload the agreement(s) that are to be signed through the DocuSign platform and will send them to the signing parties. The signing parties, will receive the document in their inbox and must accept the platform terms. DocuSign will display the agreement(s) and will indicate the place where the signature is required. Then, the platform will show a proposed signature (name of the signatory) to be accepted by the signing party. After that, the signing parties must click accept to the proposed signature and then the platform will require the signing party to include a password and place of residence. Once that is carried out as set forth above, the signing party must click the send button.
Examples of agreements that may be signed through these electronic means are purchase agreements, agency agreements, equipment lease agreements, services agreements, promissory notes7, among others. In addition, Mayer Brown has developed legal language to be inserted in the companies' charters in order to allow certain corporate acts, such as Board meetings and shareholders' resolutions, to be approved by electronic means. In any case, we recommend to include in such agreements a special clause allowing the parties to sign and exchange signature pages through these electronic means.
In the event it is not possible to use the electronic means referred above, Mayer Brown has put into practice the following mechanics for obtaining the original signature pages during the contingency period:
- The Mayer Brown office will assemble a printed packet (including the applicable number of originals required) before the closing date. The packet will include a dummy signature page (generic identifying footer), which can be used for documents that have yet-to-be contemplated.
- After that, the Mayer Brown office will prepare a pre-paid return overnight envelope directed to the relevant attorney's home to be included in the signature packet to be sent to the signatories' home address.
- The Mayer Brown office will send via courier service the signature packet (with the pre-paid UPS return envelope) to the signatories' home address. For clients that do not have strict documentation policies (i.e. banks), the cover letter will include a suggestion to download and use Adobe Scanner App (which it is available in Apple or Android devices) to scan the signature pages once executed. The application is free, easy to use and produces PDF quality scans. Afterwards, the Mayer Brown office will instruct the signatory to execute each signature page received, scan them and return them via courier with the pre-paid UPS return envelope to the relevant attorney which will hold the original signature pages in escrow.
- The client shall put the original signature pages in the return envelope received in the packet and request recollection so that the postal carrier (UPS) can pick it up and be sent to the relevant attorney's home.
- The firm´s attorney will receive the packet at her/his home to scan final documents along with the signatures pages received to distribute an electronic copy (in case it has not been sent before).
- Once the agreement is closed, a Mayer Brown attorney will send the packet to the Mayer Brown office for the exchange of originals with the co-counsels (if required, via courier service) and for filing purposes. Any unused blank signature page will be destroyed.
1 Articles 1803 of the Federal Civil Code.
2 Under Mexican law, there are only a certain number of legal acts that cannot be perfected through electronic means. Examples of formal acts or agreements that require handwritten signature are: (i) execution of a public deed (ii) any filing before the public registry of property, (ii) buying and entering into selling real estate agreements, (iv) granting general or certain special powers of attorney, and (v) enter into pledge agreements without transfer of possession, or floating lien pledge agreements, mortgages, or trust agreements (if real estate is part of the trust's assets).
3 Article 89 of the Commerce Code. "(...) Electronic Signature: The data in an electronic form recorded in a Data Message, or attached or logically associated therewith by any technology, which is used to identify the Signatory to the Data Message and indicate that the Signatory approves the information contained in the Data Message, that has the same legal effects as a "wet" signature, will be admissible in trial as evidence.
4 Article 46 bis of the Commerce Code.
5 There are court precedents admitting documents electronically signed.
6 Articles 89 bis, 1205 and 1298 A of the Commerce Code and articles 188 and 210-A of the Federal Code of Civil Procedures.
7 A case-by-case analysis shall be made considering the specific terms of the transaction.
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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.