However, the Respondent noted in its response that recognition of an electronic signature on a promissory note should be " subject to an examination of the aspects required bythe Banknotes Ordinance and the finding of a digital arrangement that will fulfill the purposes of the Banknotes Ordinance" (see the State's response of December 23, 2024, para. 11). According to the Respondent, the relevant parties are currently sitting on the issue of electronic signature on a deed, in order to formulate a comprehensive arrangement. The problem is that the state did not specify at what stage, if at all, the process is on, what the expected timetables are, and it is impossible to get rid of the impression that the process is in its infancy and is not expected to be completed in the near future.
- In these circumstances, and in light of the Applicant's claims that its business model is based on digital signatures and that it has now found itself facing a broken trough and legal uncertainty, and in the absence of an expectation of a comprehensive solution on the part of the Respondent, it is appropriate to examine the case brought before us by the Applicant on the basis of the principles detailed above, and to try to answer the question of whether it is possible to recognize an electronic signature on a promissory note, the execution of which was requested in the execution of the Execution Notice between close parties.
The answer to this question is yes in my opinion.
Is it possible to recognize an electronic signature on a promissory note that has not been traded and its execution is requested between close parties?
- The Banknotes Ordinance is based on the assumption that the three banknotes regulated therein are negotiable documents, but according to Lerner, this assumption has not been put to the test of reality (Lerner 2007, p. 66). According to him, the use of bills of exchange is very low, the vast majority of the checks are delivered by the payee to the bank in which his account is managed, and this is not a classic act of trading (see also Lerner 2013, p. 443), and as for promissory notes, these are generally used as security notes, and the creditor does not trade them. In his 2013 article, Lerner noted that "in Israel, promissory notes are not used as a means of payment as in other countries, but only as security notes" (Lerner 2013, p. 455). The advantage of the promissory note is that it grants the holder of the promissory note the promissory note, in the sense that holding the promissory note transfers the burden of proof to the promissory note defendant, and allows him to sue for its repayment directly at the Execution Office, without the need to turn to a judicial instance. In his 2013 article, Lerner presented a review of banknote law rulings for the years 2000-2010, and an analysis of the findings revealed that "all the promissory notes discussed in the case law, without exception, were given to security" (ibid., p. 456). Hence, these are banknotes that in practice are not customary to be traded in Israel.
As is well known, the laws of banknotes developed in accordance with the customs of merchants, since they were originally intended to meet their needs, and more than once the courts interpreted the laws of banknotes based on the practices practiced in the ordinary course of business, even when this contradicted the language of the Ordinance. For example, other municipal applications 466/60 Polshinsky v. Goldblum et al., 15 773 (1961), the court recognized the signature of an authorized signatory in a company as a signature on behalf of the company only, while the signatory himself is exempt from personal liability, even though according to the Ordinance the signatory on behalf of a company is required to explicitly state that he is signing on behalf of the sender. This ruling was based on the customary practice in which managers sign on behalf of a corporation and are satisfied with attaching their signature alongside the company's seal (see also Lerner 2007, p. 67)).