Property Law: Are you aware of the contractual consequences of email signatures?
We explore the validity of an email signature under section 2 of the Law of Property Act 1989
Case Study: Mr Stavros Neocleous and Mrs Kalliroy Neocleous v Ms Christine Rees [2019] EWHC 2462 (Ch)
It’s all in the intention…
This case explored whether an electronic email signature containing the name, role, and contact details of the sender was a valid signature to create an enforceable contract under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (the “Act”). The answer was yes. An electronic signature contained in an email is capable of being a valid signature under the Act and, therefore, able to bind the parties as long as it demonstrates an intention by the sender to authenticate the contents of the email.
The case concerned a dispute between neighbours over a right of way
This case concerned a dispute between neighbours over a right of way across the Claimant’s property, which was the only method of land access to part of the Defendant’s property. Although a right of way over the Claimant’s property was contained in the title to the Defendant’s property, this right was not present in the title to the Claimant’s property.
In 2016, the Defendant applied to change the title register to incorporate a right of way against the Claimant’s property at HM Land Registry. The Defendant stated that the Claimant had not allowed the Defendant to use the right of way contained in the title to the Defendant’s property. The Claimant disputed the existence of such right of way and/or the extent of such right and denied that such alleged right was not binding on the Claimant. In 2017 the matter was referred to the First-tier (Property Chamber) Tribunal (the “Tribunal”).
Prior to the Tribunal hearing, the Claimant’s solicitor and Defendant’s solicitor held settlement discussions on behalf of their respective clients. One of the potential resolutions to the dispute was for the Claimant to acquire the Defendant’s property.
Open email correspondence culminated into an offer from the Claimant’s solicitor to purchase the Defendant’s property for £175,000. This email correspondence included the terms of the settlement agreement and did not contain Subject to Contract in the subject line or contents of the emails. The Defendant’s solicitor was signed off as follows:
“Many thanks
David Tear
Solicitor and Director
For and on behalf of AWB Charlesworth Solicitors”
(There followed contact details for the Defendant’s solicitor.)
The Claimant’s solicitor replied, expressly confirming agreement to its contents in the following email:
“Thank you for your email and I confirm my agreement with its contents.
Kind regards
Daniel
Daniel Wise – Associate
Dispute Resolution for and on behalf of Slater Heelis LLP”
(There followed contact details for the Claimant’s solicitor.)
The Tribunal was made aware of the settlement and the relevant hearing withdrawn from the list. The Defendant’s solicitor began drafting a consent order. However, shortly after the drafting process commenced, the Defendant rejected attempts to reach a signed agreement and subsequently the Defendant’s solicitor applied to the Tribunal for the matter to be re-listed.
The Claimant applied to the county court for specific performance of the settlement contract they alleged had been concluded in the emails between the Claimant’s solicitor and Defendant’s solicitor.
A closer inspection on email exchanges
This case revolved around the crucial point of whether the email exchange between the Claimant’s solicitor and Defendant’s solicitor complied with the provisions of section 2 of the Act, and specifically, section 2(3) of the Act, and therefore whether it created an enforceable contract.
Section 2(3) of the Act states:
“The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract.”
In cross examination the Defendant’s solicitor conceded that there was a contractual intention at the time of the email exchange and that the email exchange incorporated all the terms of the settlement agreement. However, the Defendant still contended that, in any event, the email exchange did not comply with the Act because it was not signed by both parties.
Does it qualify as a signature?
Drawing upon the comments of His Honour Judge Pelling QC in J Pereira Fernandes S.A v Metha [2016] 1 WLR 1543, His Honour Judge Pearce concluded that because the name (electronic signature) was applied with authenticating intent, it was in fact a ‘signature’ for the purposes of the Act.
The Defendant’s solicitor contended that because the email signatures contained in the emails were automatically inserted, this did not show such intent to authenticate the contents of the email and therefore was not compliant with the Act. However, His Honour Judge Pearce was of the view that even if such electronic signature is automatic, the recipient of the email would naturally assume that the electronic signature had been included as identification of the sender. It is therefore of little (or no) importance whether the electronic signature was added “as a result of a conscious decision” or automatically inserted.
Further, the use of words such as “Many Thanks” used by the Defendant’s solicitor before the email footer shows that the intention of the sender is to associate their name with the contents of the email. This in itself confirms an intention to authenticate the contents of the email, even if the sender’s name is entered automatically. The use of such wording (or similar) is not a condition precedent to authenticate an email signature because an email signature on its own, without such wording, can evidence authenticating intent.
Embracing eSignatures in an increasingly paperless world
This case provides a welcome precedent in an increasingly paperless world and shows progressive movement into allowing parties to create binding contracts without the need to circulate printed ink contracts. However, it also serves as a warning and sends a message of ‘sender beware’.
In practice this means that terms or amendments to contracts which are agreed in open email correspondence can be binding if they contain email signatures, even if hard copies of the relevant documents are not subsequently issued. This serves as a reminder to ensure all emails which contain terms or amendments to contracts are appropriately pre-empted with “Subject to Contract” or “Without Prejudice” or other similar wording to demonstrate the contents of the email are not intended to be binding so as to avoid the possibility of inadvertently creating an enforceable contract.
To avoid possible contractual consequences…
…Or if you require further information or advice regarding the contents of an email containing electronic signatures, please do not hesitate to contact one of our team members.
This article was contributed by Sophie Griffiths, Paralegal in our Construction team.
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