An email chain containing automated e-signatures/footers can amount to a document signed by the parties (or their agents) and constitute a contract for the sale of land

Summary

Issue: Among other statutory formalities, a contract for the sale of land must be signed by or on behalf of each party.

The case of Neocleous v Rees considered whether an automatically generated Microsoft Outlook electronic signature/footer on an email sent by solicitors acting for parties seeking to settle a land dispute could constitute a "signature" for the purposes of section 2 Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A).

Held: The judge held that the automatic generation of the solicitor's name and contact details at the foot of the email chain setting out the terms of the settlement agreement constituted a signature for statutory purposes.

A binding contract for the sale of land existed which had been validly signed by the authorised agents of the parties (the solicitors on behalf of their clients) by the automatic generation of the solicitor’s name and other details.

Case facts

The parties were involved in litigation regarding a right of way. To settle the dispute, it was proposed that the claimants would buy from the defendant (for an agreed sum) the area of land that benefited from the alleged right of way. A settlement agreement was reached by email between the parties’ acting solicitors. The defendant’s solicitor set out the terms of the settlement agreement in an email (including the price, the property to be transferred, and a requirement to use best endeavours to complete as soon as possible). The original email and acceptance were "open" and not marked "subject to contract" or otherwise. Subsequent emails were marked as such. The defendant’s solicitor’s name and details appeared at the bottom of the email. In reply, the claimants’ solicitor confirmed agreement. In similar fashion, the claimants’ solicitor’s name and details appeared at the bottom of his email.

The defendant’s solicitor contended that, because his signature was automatically generated by Microsoft Outlook on each outgoing email, it could not be regarded as his signature for section 2 LP(MP)A purposes: he said that he had not physically added his name at the bottom of the email 

The judge held:

• the sender of the email would have known that his name would automatically be added as a footer, and that the presence of the sender’s name “indicates a clear intention to associate oneself with the email – to authenticate it or to sign it.” 
• the inclusion of the footer resulted from a conscious decision to insert the contents, albeit that decision resulted from an automatic process. The recipient of such an email with the footer would therefore naturally conclude that the sender’s details had been included as a means of identifying the sender with the contents of the email.
• the use of the words “Many Thanks” immediately before the place at which his signature would be generated showed an intention to connect the name with the contents of the email.
• The presence of the name and contact details was in the conventional style of a signature, at the end of the document (as opposed to, for example, where the name and address appears above the text of the letter, in the conventional manner of inserting the addressee’s details).
• a binding settlement agreement for the transfer of land had been entered into: the two emails (which, combined together to form an email chain) amounted to a single document which had been signed by the authorised agents of the parties by their automated signatures at the foot of each email.

Comment

This case reflects modern times and a move away from a traditional understanding of a signature on a contract (Denning LJ: "he must write with own hand upon it"). However, the possibility of a contract being inadvertently created through name and other details being automatically inserted as a footer in the email should ring alarm bells for senders of email communication. It highlights the importance of ensuring correspondence is appropriately marked to avoid it inadvertently being binding whether by email or through postal communication. However care should also be taken with standard phrases such as "subject to contract" which are not necessarily a panacea defence.

This is a County Court decision and may be the subject of an appeal. The case also involves a rare type of section 2 contract: one made in “one document” as opposed to one made “where contracts are exchanged". In the vast majority of transactions, a contract for the sale of land comes into effect through the exchange of formal contracts for sale. However, a valid contract can also be made in one document, provided the document contains all expressly agreed terms and is signed by or on behalf of both parties

Unless the case is appealed, it does serve as a salutary warning that e-signatures do come with a health warning: think of the consequences before using them. Email footers are the norm, but because of the prevalence of automatically added signatures, careful consideration must be given to the content of email communication to avoid it being construed as a contract and the parties becoming inadvertently bound. 

Law Commission report on electronic signatures

The case follows hot on the heels of the Law Commission's report on "Electronic execution of documents" which states the Commission's view is that electronic signatures (e-signatures) are valid and can be used to execute documents as an alternative to wet ink signatures in most circumstances. They can also be relied on as evidence. However, there still remains an issue with deeds and the requirement for these to be witnessed. The law requires that a deed must be signed in the presence of a witness who attests the signature, in other words, the witness has to be physically present. Currently, the law does not allow for remote witnessing. In addition, documents required to be registered at the Land Registry must be executed using "wet ink signatures" until the Land Registry indicates that it will accept electronic signatures. The report only relates to the laws of England and Wales. 

The Commission’s view is based upon both legislation and court decisions relating to non-electronic and e-signatures. Alongside recommendations relating to the practicalities of e-signatures, the Commission has also set out an option for reform, in which the law of e-signatures would be codified, as this would increase the accessibility of the law.