Email sign-offs – The far-reaching consequences email communication has on contractual obligations - E-signatures – to sign or not to sign off?

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Introduction

In our respective businesses, thousands, if not millions, of emails are exchanged every month. Amongst the thousands of emails we send and receive, some may end up legally forming contracts, changing existing contractual arrangements or guaranteeing obligations of third parties.

Pivotal Judgment

On September 20, 2019, a court in the UK delivered a pivotal judgment that is central to the modes of operation of many, if not all, businesses across the world. This case, Neocleous v. Rees [2019] EWHC 2462 (Ch) bolstered the fact that the inclusion of a name in the email footer constitutes a signature, which, in essence, is equivalent to one’s handwritten signature and can therefore be contractually binding on a person.

The case was grounded in a land dispute between the claimants (Mr Stavros Neocleous and Mrs Kalliroy Neocleous) and the defendant (Ms Christine Rees). The claimants and the defendant owned property known as Wilders’ Wood, comprising two parcels of land bordering each other. A right of way servitude appeared on the defendant’s land title but did not appear on the claimants’ land title. The claimants applied to Her Majesty’s Land Registry to register a right of way servitude against the claimants’ land, to which the defendant objected. The matter was referred to the First Tier Tribunal, where settlement discussions took place between both parties’ lawyers. During these discussions, the lawyers exchanged a number of emails regarding the dispute. The defendant’s lawyer sent an email to the claimants’ lawyer setting out proposed settlement terms under which the claimants would buy part of the defendant’s land to guarantee a right of way servitude on their land at €200,000. The claimants’ lawyer rejected this offer in a reply and sought a lower figure of €175,000, as a full and final settlement on behalf of the claimants.

The defendant’s lawyer emailed the claimants' lawyer stating that his clients accepted the claimants’ offer of €175,000 “as a full and final settlement of the Tribunal proceedings and any and all further claims between the parties. Our clients will bear their own costs of these proceedings and in respect of the Transfer and Release. I would be grateful if you would acknowledge receipt of this email and confirm your agreement to the above in order that I can advise the Tribunal. Many Thanks, xxx (on behalf of our clients).”

The claimants’ lawyer responded to the email confirming his agreement to the contents of the defendant’s lawyer’s email. Both parties informed the Tribunal that a consent order was required. However, the defendant’s lawyer emailed the Tribunal informing it that a settlement had not been reached between the parties and requested that the application be relisted. The claimants then filed this matter, seeking specific performance for what they alleged was a contract of compromise.

The claimants’ arguments were that the emails referred to amounted to a binding contract of compromise. They agreed that since the agreement involved the disposition of interests in land, it must satisfy the formality requirements of the laws of property in their jurisdiction. They contended that the two emails amounted to a single document, which is signed by or on behalf of each party, and therefore the formalities of a binding contract were met.

The defendant argued in rebuttal that there was no contractual intention at the time of the email exchange. The email exchange did not comply with the requirements of their laws of property in that it failed to incorporate all of the terms of the agreement and, in any event, the agreement did not comply with the requirement of execution by the parties.

The court found that the defendant’s submission (that the meaning “signed” requires a handwritten name or at least a facsimile of such handwriting) depends on the alleged meaning of that word to an ordinary person. The ordinary usage of words has a tendency to develop. The court stated that it is common cause that the footer (in an email) can only be present because of a conscious decision to insert the contents and the sender of the email is aware that their name is being applied as a footer. Secondly, the recipient of an email has no reason to think that the presence of the name as a signature is unknown to the sender and the use of “many thanks” before the footer shows an intention to connect the name with the contents of the email.

In consequence, the court held that the claimants were entitled to the order of specific performance, for which they had approached the court.

This case is, however, not the first to consider the binding nature of the content of emails. Another British court has previously found that an email chain and electronic signature are sufficient to create a binding contractual guarantee. A first name, initials or perhaps even a nickname could be sufficient to bind a person because putting a name in the email indicates authority and taking responsibility for the email’s content.

Conclusion

From the above court decisions, it would appear that it is now legally accepted in the UK that an electronic signature within an email can be sufficient to bind a party in contractual matters, provided the terms of the contract have been made clear within the emails.

These judgments highlight the inevitability of electronic communication as a vital part of modern day business and take into account the modernised view the judiciary are taking in response to technological developments. Moreover, the recurring principle in all these cases is that an e-signature is sufficient to satisfy the requirements for a document to be signed in writing. Courts are open to consider that the risk of an e-signature failing to satisfy the requirements for a “written” contract to be “signed” is low, regardless of the form.

Caution is, therefore, of extreme importance when writing emails. If you have no intention of creating legally binding rights and obligations, always draft your emails to reflect that intention.

Dentons takes this opportunity to thank Dennis Otatiina, Managing Partner and Agatha Gloria Etyang at Dentons Kampala, Uganda for their contribution to this month’s newsletter.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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