It is very difficult and risky to maintain anonymity when entering into a contract. However, as is commonplace in the crypto space, there may be good reasons that you wish to maintain your anonymity and there are certain ways to protect your identity, although none are foolproof.
Signing with a pseudonym
Instead of signing a contract with your real name, you could choose to sign it with a pseudonym or your initials to protect your identity. However, this carries certain risks.
Firstly, if you are a sole trader, the Companies Act 2006 requires that you include your full name on any written orders for goods or services and on invoices. Failure to do so is an offence which could land you with a £1,000 penalty, and continuing daily fines if you don’t remedy the situation.
Secondly, the counterparty to the contract could lose confidence in your trustworthiness if you refuse to give them your name. They may suspect you have nefarious reasons for doing so, and may refuse to sign the contract with you, which could lead to a loss of profits and even reputational damage.
Thirdly, the identity of the parties to a contract is considered to be fundamental to the validity of the contract. In the case of Hombourg Houtimport BV and others v Agrosin Private Ltd and another [2004] 1 AC 715, Lord Millet stated that the identity of the parties “goes to the very existence of the contract itself. If it is uncertain, there is no contract”. In the event of a dispute, a court could find that a written contract signed with a pseudonym is invalid, unless there is sufficient external evidence to prove that the parties knew each others’ identities.
Using an NDA
Non-disclosure agreements (also known as confidentiality agreements or NDAs) impose an obligation of confidentiality on a party. The definition of confidential information needs to be carefully drafted to include your name and the agreement can also limit the purpose for which the information is used.
A mutual NDA, where both parties disclose confidential information to each other, may offer increased protection as the other side has also put its own information at risk.
The risk you are taking with an NDA is that this still requires you to give the confidential information, in this case your name, to the other side. The risks of the information being leaked remain, for example if a conversation is overheard, a computer is hacked or an email is sent to the wrong recipient.
Further, the other side may require:
- A time limit to be put on the obligation to keep the information confidential;
- Exceptions to the duty not to disclose, so that it can, for example, give the information to its employees or advisors or to enable it to comply with a disclosure request from a court or governmental authority.
The protection an NDA provides is the ability to sue the other side if it discloses or misuses that information. If you are aware the information might be disclosed in the future, you might be able to obtain an injunction barring the disclosure, but this is not a useful remedy if the information is already out there. After a disclosure, you may be able to sue for damages, but it will be difficult for a court to ascertain the value which should be given to your anonymity unless it causes you quantifiable losses.
Using an agent
An agent is a person who is able to sign contracts on your behalf. Anonymous artist Banksy reportedly uses a trusted agent to sign contracts for him. In such a situation, your agent would be bound by an NDA, but you would need to have utmost trust in their discretion. It would also be advisable to sign an agency agreement governing the limits of the agent’s authority to act on your behalf.
An agent can sign a contract for an unidentified principal, but is taking on considerable risk in doing so, as they may be held personally liable for any default or breach of the contract by you, because in the event of a dispute the only option for the other side is to sue the agent. English law has not reached a definitive answer as to what would happen in such a situation, but, depending on the sums involved, the agent would be under tremendous pressure to break their NDA and disclose your name to the suing party and/or the court.
If the agent kept your identity secret throughout but lost such a case, they would likely pursue you under a direct indemnity in any agency agreement or under the implied indemnity from principal to agent imposed by the common law.
Using a company
UK companies can sign contracts in the following ways:
- Signed by a director and/or company secretary or other authorised person on the company’s behalf - this would still mean putting an individual’s name to the contract, but that individual could be an agent or someone acting under a power of attorney, rather than yourself;
- Made by the company under its common seal - this literally means using a stamp with the company’s name on it.
We always advise that individuals make use of company structures in their business (see further here). While these methods may allow you to keep your own name off a specific contract, and mean that you escape personal liability under the contract, remember that publicity requirements for UK companies mean that your name is required to be published on Companies House if you are a director or a shareholder of the company owning more than 25% of the shares, or if you otherwise exercise significant control over the company. Companies in other jurisdictions may have more limited publicity requirements, but the global trend is for greater transparency in corporate structures.
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