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10 October 2019

A sign of the times

When might your email sign-off bind you to a contract?

Commentary on the Case of Neocleous v Rees [2019] EWHC 2462 (Ch)
Background

The Claimants and the Defendant owned adjacent property whereby a waterfront parcel of the Defendant’s property was only accessible on land by crossing the Claimants’ property. A right of way was noted on the Defendant’s relevant title but was not referred to in the Claimants’ title documents.

In August 2016, the Defendant applied to change the register to add a right of way against the Claimants’ title, to which the Claimants objected. It was in respect of settlement discussions by the respective solicitors on behalf of each of the parties that the present issue arose.

Email correspondence between the respective solicitors set out and confirmed the terms of settlement between the parties, following which the hearing was vacated. The specific emails in question had an automatic email sign-off which included the Defendant’s solicitor’s name and contact details. The Claimants’ position was that this amounted to a binding contract of compromise in respect of which they sought specific performance. The Defendant contended that there was no enforceable contract and the terms had not been finalised.

The parties agreed that this involved the disposition of interests in land and that therefore it must satisfy the formalities required under the Law of Property (Miscellaneous Provisions) Act 1989.
However, there were three main areas of disagreement in the pleadings: (i) whether the emails demonstrated contractual intention; (ii) whether the emails amounted to a “single document” incorporating all of the terms of the alleged agreement; and (iii) whether the signature requirement of the legislation was met. The Defendant conceded points (i) and (ii) at trial, leaving only the issue of whether the emails had been “signed”.

How should “signed” be interpreted in these circumstances?

The court considered the approach in Firstpost Homes Ltd v Johnson [1995] 1 WLR 157, which was put forward by the Defendant, that a signature should be “handwritten (or at least a facsimile of such handwriting)”. However, the court noted that this must be interpreted in the context of what an ordinary person believed the word “signed” to mean at a point in the past and that in the current age the understanding may differ.

The preferred approach was the test set out in J Pereira Fernandes SA v Mehta [2006] EWHC 813 (Ch), which was whether the name was applied for the purpose of giving authenticity to the document. The judge compared the scenario here, where the name and contact details were set out in the conventional style of a signature at the end of the email with Firstpost, where the name and contact details of the alleged signatory appeared above the text of the letter in a manner which would not normally be understood to be a signature.

The court noted that “the ordinary usage of words has a tendency to develop” and that many ordinary people would nowadays consider a word processor “signature” function to indeed be a “signature”.

What about the fact that the signature is automatically added to every email?

The Defendant emphasised the fact that the email sign-off was automatic and not therefore a sufficient act to constitute “signing”. However, the court noted that setting up an automatic email sign-off and specifying the rules applicable to it, was itself the conscious decision of the person inputting the contents. Furthermore, the recipient of the email would never know if the sign-off had been automatically added or manually typed by the sender.

The court concluded that, when looked at objectively, inclusion of the name at the end of the email “indicates a clear intention to associate oneself with the email – to authenticate or sign it”.

Summary

It was held that, so long as the inclusion of the person’s name was for the purpose of giving authenticity to the document, then an automatic email sign-off could result in the document being “signed” for the purposes of the relevant provisions of the Law of Property (Miscellaneous Provisions) Act 1989.

The Defendant’s solicitor was held to have signed the relevant email on behalf of the Defendant and the Claimants were therefore entitled to the order for specific performance.

Commentary

The meaning of “signed” has been discussed at length in legal commentary, most recently in the Law Commission Report No. 386 on the Electronic Execution of Documents, published on 4 September 2019, which you can read further here: https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2019/09/Electronic-Execution-Report.pdf.

However, this case is seemingly one of the only reported decisions on the specific point as to whether an automatic email sign-off renders a document “signed”.

The position will depend on the context and content of the specific email, but this does raise the question – should a further disclaimer be added to email footers making clear that email cannot be used to conclude binding agreements on behalf of the relevant company? However, this may not always be appropriate. The ability to contract on a more informal basis can be useful for smaller organisations, for example.

Although this case refers to a specific and narrow fact pattern, it also highlights broader questions about how legal formalities should adapt to today’s technological advances. Do “wet ink” signatures still have a role to play in a digital society or are they quickly becoming old-fashioned?


This article was written by Tanya Wilkie. For more information, please contact Tanya on +44 (0)20 7203 5058 or at tanya.wilkie@crsblaw.com.

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