Allyson Colby explains why a county court decision on e-signatures has potentially widespread effect.
Key points
- A county court has ruled that section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 does not require a wet-ink signature
- An electronically generated signature in an e-mail will suffice if it was inserted with the intention of authenticating the document
The world’s oldest known signature was added to a clay tablet in Sumeria by a scribe in 3100BC, or thereabouts. However, it was only when parliament enacted the Statute of Frauds in 1677 that the practice of adding signatures to contracts took root in England.
The requirement for contracts for the sale of land to be both written and signed is now enshrined in section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. But it reached the statute book just as digital technology was beginning to evolve, and electronic transactions are now commonplace. Will an electronic signature satisfy section 2?
In First Post Homes Ltd v Johnson [1996] 1 EGLR 175, the Court of Appeal held that a buyer’s typed name, which appeared at the top of a letter signed by a seller, was not a signature even though the buyer had typed in his name himself: “In modern English usage, when a document is required to be ‘signed by’ someone, that means that he must write his name with his own hand upon it.”
Has the law moved on since then? Neocleous v Rees [2019] EWHC 2462 (Ch); [2019] PLSCS 189 bears a High Court citation but is a county court judgment. It was decided shortly after the Law Commission published its report on Electronic Execution of Documents (Law Com 386) and espouses the Law Commission’s view that an electronic signature is capable of satisfying section 2, if it was inserted to authenticate the document.
E-mail signature
The parties were engaged in litigation about a right of way, but agreed to settle their dispute before it came to court. The compromise agreement, which required one of the parties to buy the other’s land, was discussed on the telephone and then confirmed in an e-mail string that bore the names of the solicitors acting for the parties; their respective names appeared at the end of their respective messages.
Despite having authorised her solicitor to strike the deal, the seller refused to complete the transaction and sought to revive the litigation. So the buyers sought an order for specific performance, claiming that the e-mail string constituted a written contract for the sale of land, which was signed on behalf of both parties.
Initially, the seller tried to claim that the parties lacked contractual intention. But, at trial, the only issue between the parties was whether the seller’s solicitor’s name (which appeared at the bottom of his e-mail recording the terms of the parties’ agreement and inviting the buyers’ solicitor to confirm them) satisfied the signature requirement in section 2.
The seller conceded that a document may be “signed” where an electronic facsimile, created by scanning a wet-ink signature, is incorporated in a document. However, signatures like this replicate an actual signature and are inserted deliberately. But, in this case, the seller’s solicitor’s name was generated automatically and formed part of a “footer” that included the solicitor’s job title, his firm’s name and contact details.
Authenticating intention
The judge noted that, while the Electronic Signatures Directive 1999/93/EC and the Electronic Communications Act 2000 seek to give effect to electronic signatures, neither purports to determine whether such a signature is capable of satisfying an existing statutory signature requirement. In addition, neither focuses on form (for example, on whether the signature is typed or is a facsimile of the handwritten version). Instead, both focus on whether the signature has an authenticating purpose.
There was force in the argument that the rationale for the decision in First Post was that the disputed signature was of the recipient as the addressee of the letter, and was not inserted in the conventional style of a signature at the bottom. Furthermore, in Green (liquidator of Stealth Construction Ltd) v Ireland [2011] EWHC 1305 (Ch); [2011] PLSCS 143 the court accepted, without protest, a concession that the insertion of a name at the end of an e-mail satisfied the signature requirement in section 2.
In the judge’s view, the meaning of words tends to develop over time and should not be circumscribed by the past. The soundest test of whether something constitutes a “signature” was laid down in J Pereira Fernandes SA v Mehta [2006] EWHC 813 (Ch). So the question was: was the solicitor’s name applied to the document with authenticating intent?
The sender’s name appeared in the e-mail thanks to a conscious decision, at some stage, establishing a general rule applying to all e-mails sent by the law firm that represented the seller. So, when the seller’s solicitor signed off with the words “Many thanks”, he knew that his name would appear at the end of his e-mail.
Looked at objectively, its presence indicated his intention to associate himself with the e-mail – to authenticate or sign it. The recipient would have no way of knowing whether his details were added automatically, or whether they were entered manually, and it would be undesirable if extrinsic evidence were to be required to prove an authenticating intention. So the buyers were entitled to specific performance of the contract for the sale of the land.
Safeguards
A county court judgment is not a binding precedent, but this may be a forerunner of decisions to come. Therefore, to reduce the risk of signing contracts inadvertently, parties to potential land transactions would be well-advised to use the words “subject to contract” in electronic messages, and to send new messages referring to previous messages, instead of replying, because a reply to a message creates a single document whose contents could satisfy the requirements in section 2.
Allyson Colby is a property law consultant
