A recent reminder from the courts to be careful when using email communications, as the interpretation of what constitutes a signature could mean you’ve entered into – or varied – a contract without necessarily knowing it. David Moore, Senior Associate at Capital Law, reviews what to look for.
The Court of Appeal * recently considered email communication and whether this could have the effect of entering parties into a contract – related to an interest in land – where the usual email signature had been used, but no formal written signature was ever provided.
The context of this was a case involving two private individuals managing the ownership of a family home, which they had owned together equally, after they had separated (unmarried).
The relevant and important email exchange contained the following wording: “your suggestion, as I understand it, is you get sole ownership of your shares and pension, I get the equity from the house, the house contents, savings and income from endowments. Is that right? If so, then I will accept this and will do everything I can to get the house ready for sale”.
To which came the following response: “Yes, that’s right…Under this arrangement, I’ve no interest whatsoever in the house, so whilst I will continue to contribute, I won’t do so forever.” The emails in the chain had been signed off by the writer’s names in typed text.
This was the question the court was required to answer. If they were, this exchange could be considered to have entered the parties into a binding agreement. If not, there would have been no such agreement in law.
The court considered if there was a statutory definition of ‘signed’ – there is not. Previous case law considering the point established that printing a name, a rubber stamp and the name on a telegram form all amounted to signatures.
Meanwhile, the court noted that an Act of Parliament is “always speaking” – meaning that interpretation of legislation by the courts should take into consideration future technological advances that weren’t known at the time the act became law.
The court’s view was that adding the writer’s name to an email does amount to a signature, noting that it was appropriate for the law to keep up to date with how modern users of current technology would understand what ‘signing’ meant to them.
The emails were, therefore, considered to be signed and the beneficial interest to the whole family home was passed accordingly*. One of the appeal judges noted that it is entirely conventional to sign off emails by writing one’s name and there was “no doubt” that this satisfies the requirement for a signed written agreement.
Although this was a case dealing with a land transaction, the principle of what amounts to a signature can be applicable in other circumstances. Indeed, the courts have previously confirmed that an exchange of emails can amount to a variation of contract where there is a requirement for these to be in writing and signed* whilst also asserting that there is no distinction to be made between a written ‘signature’ on an email and an auto-generated one, the type most users of business email will be familiar with*.
Perhaps unsurprisingly, the most important consideration is to be cautious when writing, in any form, about matters which could be contractual in nature. It could assist to make sure that any such exchanges are headed (or noted, if spoken) to be “Subject to Contract”. Using this term means that what is said, intended or agreed is to be made subject to the provisions of an express contract, to reflect the terms of what is agreed and where any mistakes or irregularities would, hopefully, be ironed out.
If there are circumstances in which you are unsure whether a binding agreement has been formed, consult a specialist lawyer who can assist in your understanding of the weight a court is likely to give to words said or written.
At Capital Law, we have expert specialists in contractual and property matters who can advise on the discrete points of law that may arise.
* In Hudson v Hathway  EWCA Civ1648
* Pursuant to the Law of Property Act 1925, s.53(1)
* C&S Associates UK Ltd v Enterprise Insurance Company Plc  EWHC 3757 (Comm)
* Neocleous v Rees  EWHC 2462 (Ch)