When Does an Email Signature Confirm Intention to Contract?
Contractual negotiations can be littered with pitfalls for the unwary, particularly where one party believes a binding contract was reached. Today’s businesses are discussing terms and conducting negotiations in a technological age where email plays a major part in communications.
Against that background, businesses must be on their guard given a recent ruling1 where the court found that a series of emails, bearing a solicitor’s email signature, amounted to a binding contract for the sale of land.
Though particularly relevant to companies who buy and dispose of land and property, the ruling may also be significant in circumstances where contractual terms require an agreement or notice to be in writing and signed in order to be effective.
What’s the background?
A dispute over a right of way led to negotiations relating to a proposed settlement under which a couple (the claimants) would buy a small piece of land with an adjacent jetty on Lake Windermere for £200,000 in full and final settlement of the defendant’s claims.
The claimants sought specific performance of what they argued was a binding contract for the disposition of an interest in land. The defendant argued that the alleged contract was unenforceable as it failed to comply with section 2 of the Law of Property (Miscellaneous Provisions) 1989 Act which requires that a contract for the sale of land must be in writing, incorporating all the terms expressly agreed between the parties and signed by or on behalf of each party.
Notably, the defendant had instructed his solicitor to accept the offer – though clearly, he changed his mind and wanted to renege on the deal reached.
The negotiations themselves took place primarily via email with the putative contract contained in a string of emails. The purported signature of the defendant’s solicitor was automatically generated as is typical of email correspondence. The key issue for the court was whether this was adequate to render the document ‘signed’ on behalf of the defendant for the purposes of section 2.
The court gave important consideration to the Law Commission’s consultation document on the electronic execution of documents which states: "Our provisional view is that the combination of EU law, statute and case law means that, under the current law, an electronic signature is capable of meeting a statutory requirement for a signature if an authenticating intention can be demonstrated."
The court said a sound guide as to whether a signature is, in fact, a signature is the test of whether the name was applied with authenticating intent (a test adopted by the Law Commission). The emails in this case stood this test, and the court came to a number of conclusions including:
· It is common ground that such an [email] footer can only be present because of a conscious decision to insert the contents, ie the signature. The recipient would therefore naturally conclude that the sender's details were included to identify the sender with the contents of the email;
· The sender is aware their name is being applied as a footer and the recipient has no reason to think that the presence of the name as a signature is unknown to the sender;
· The use of ‘Many Thanks’ before the footer shows an intention to connect the name with the contents of the email; and
· The presence of the name and contact details is in the conventional style of a signature, at the end of the document.
The court held that that the emails were signed by the automatically generated email signature included at the bottom of the emails. The contract was, therefore, binding and enforceable.
What does this mean?
The ruling gives useful clarity on the court’s approach to electronic signatures and their validity, against the background of the developing law and procedure in our technological age.
Businesses therefore need to be mindful of the court’s concluding principles above, particularly in circumstance where it could be argued there was an intention to create a legally binding contract. Particular caution must be exercised when negotiations relate to the disposal of land and property interests.
1Neocleous v Rees [2019] EWHC 2462
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