Electronic execution: take care before hitting "send" - automatic email signatures can form legally binding contracts
Electronic signatures are becoming increasingly commonplace in the 21st century as advances in technology change the way in which consumers and businesses enter into binding transactions. Vivian Lee and Robert Goodlad consider the recent case of Neocleous and Another v Rees  EWHC 2462 (Ch), in which the Court decided that an automated email signature block at the end of an email created a binding contract for the sale of land.
Mr and Mrs Neocleous, the Claimants, were involved in a land dispute with Ms Rees, the Defendant, over a right of way. The matter was listed to be heard by Tribunal, but prior to the hearing Mr Wise, the Claimants' solicitor, offered to settle the dispute by purchasing a piece of the Defendant's land for £175,000. This offer was initially accepted by Mr Tear, the Defendant's solicitor, during a telephone call on 9 March 2018. Later that day, Mr Tear emailed Mr Wise the terms of settlement, signing off the email with 'Many thanks' and an automatically generated Microsoft Outlook signature block which included his name, position, department, firm name, and contact details. The Tribunal was then notified and the listed hearing was vacated.
In the event the Defendant failed to complete the purchase and argued there was no binding settlement agreement because the requisite execution formalities had not been complied with. The Claimants contended that the email chain comprised a contract which had been signed by the insertion of an automatically generated footer containing the name and contact details of the sender. As the case concerned the disposition of an interest in land, the Court were asked to consider whether Mr Tear's automatically generated name at the foot of the email constituted a signature for the purposes of section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989.
High Court Decision
The Court decided that an automated 'email footer' electronic signature could be valid. In ruling for the Claimants, HHJ Pearce held that whether something amounts to a signature should be approached using the test identified in J Pereira Fernandes SA v Mehta  EWHC 813 (Ch) (which had also been adopted by the Law Commission in its Electronic Execution of Documents Report – see below), namely whether the name was applied with authenticating intent.
The Defendant had argued that the definition of 'signed' should be determined on the alleged meaning of that word to the ordinary person, following Firstpost Homes Ltd v Johnston  1 WLR 157, and therefore required at least a facsimile of handwriting. This reasoning was not accepted. HHJ Pearce instead emphasised that the ordinary usage of words has a tendency to develop, and in the current age, a 'signature' is capable of encompassing the wording in the footer of an email.
The fact that the footer was created automatically in every email did not diminish Mr Tear's authenticating intent. He was aware his name was being applied when sending the email and setting up the automatic signature block in Microsoft Outlook involved a conscious action by Mr Tear at some stage. Mr Tear's manual typing of the words 'Many thanks' before the footer further showed an intention to connect his name with the contents of the email. Furthermore, the recipient of the email, Mr Wise, had no way of knowing whether the signature block was added pursuant to an automatic rule as in this case, or by the sender manually entering it. The Court noted that, on the face of it, the Defendant's argument sought to use a "serendipitous technical defect in formality to renege upon a deal".
For these reasons, the Court found Mr Tear's automatically generated name at the end of the email on 9 March 2018 to be a proof of signature and sufficient to create a binding contract under Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The Claimants were therefore entitled to the order of specific performance which they sought.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.