Gordon Ramsay was recently held liable as guarantor on a lease even though his signature had been written by a machine. Peter Williams and Alan Riley consider the implications
In the recent case of Ramsay v Love [2015] EWHC 65 (Ch) (EG 21 February 2015, p84), the court held that the celebrity chef and restaurateur Gordon Ramsay was bound by a personal guarantee of the £640,000 a year lease of the York & Albany, one of his company’s restaurants. The lease of the restaurant contained a guarantee from him, although he had not personally executed the lease. His signature had been added to the lease by means of a Ghostwriter Manual Feed Signature Machine.
The question the court had to decide was whether Ramsay had authorised his father-in-law, then manager of his business, to use the machine to apply his signature to the lease. On the facts, the judge decided that Ramsay had given authority to offer his personal guarantee when the business required it.
This decision raises some difficult issues about what constitutes a signature. This is a key question in relation to both guarantees and property contracts, both of which are governed by statutes that require documents to be signed. Can a contract for the sale of land be created without a “wet-ink” signature?
What is a signature?
There is no single answer to this question. According to the Concise Oxford Dictionary, a signature is a person’s name written in a distinctive way as a form of identification or authorisation. In December 2001, in its advice document Electronic commerce: formal requirements in commercial transactions, the Law Commission stated:
“The common understanding of a signature is the writing by hand of one’s full name, or initials and surname. However, other forms of identification have been held to satisfy a signature requirement.”
The key question though is not “what is a signature?” but “what amounts to a signature where a signature is required under a specific statutory provision?” In the context of property contracts, there are two specific statutory provisions requiring signatures:
- Section 4 of the Statute of Frauds 1677 requires a memorandum of a guarantee to be in writing and signed by or on behalf of a guarantor;
- Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 requires a contract for the sale of an interest in land to contain all expressly agreed terms and be signed by both parties (or where contracts are exchanged, one part to be signed by each party).
There is no reason why the concept of “signature” should be the same in these two cases, particularly in the light of comments made by the Court of Appeal in Firstpost Homes Ltd v Johnson [1995] 1 WLR 1567; [1996] 1 EGLR 175. This was the first decision in the Court of Appeal relating to signatures after the 1989 Act came into force. The question arose whether a party’s name, typed into the body of a letter, constituted a signature. Peter Gibson LJ said:
“In my judgment, it is an artificial use of language to describe the printing or the typing of the name of an addressee in the letter as the signature by the addressee when he has printed or typed that document. Ordinary language does not, it seems to me, extend so far.”
He then quoted Denning LJ in Goodman v J Eban Ltd [1954] 1 QB 550:
“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.”
He went on to say:
“In any event, I do not accept that authorities on what was a sufficient signature for the purposes of the Statute of Frauds and section 40 of the [Law of Property Act 1925] should continue to govern the interpretation of the word ‘signed’ in section 2 of the Act of 1989.”
Section 40 of the 1925 Act was the predecessor of section 2 of the 1989 Act, but was drafted in quite different terms.
That suggests that, should it wish, a court could decide that cases relating to guarantees in relation to the Statute of Frauds are not relevant when considering a case relating to a property contract under section 2.
But having said that, the question still remains: what would the ordinary person understand by the word “signed” in the light of modern technology?
Signatures written by a machine
It is unclear whether the court’s decision in Ramsay constitutes a recognition that a machine can “sign” a document. The Ghostwriter machine was designed to write Ramsay’s signature using a normal pen, following instructions embedded into a card inserted into the machine. So to a recipient of the document this was a wet-ink signature. The question is: was it Ramsay’s signature? Unfortunately, the case turned on whether Ramsay had given authority for the machine to be used to write his signature, and so the court did not need to decide that point. However, to an extent, the machine was an extension of Ramsay’s arm (or his agent’s arm), so the conclusion might be: why not?
Signatures within e-mails
It seems likely that a property contract can be created if a string of e-mails, amounting to one document, contains all expressly agreed terms, and is signed by or on behalf of both parties. The Law Commission commented on the possible validity of a signature typed into an e-mail, observing that it has long been accepted that the fact that a signature was not written in manuscript by the signatory will not deprive it of validity. However, this comment was written in a general commercial context and was not directed towards signatures in the context of section 2.
The Law Commission’s view was borne out by two recent cases in which the courts accepted that a person’s typed name at the foot of an e-mail can constitute a signature sufficient to satisfy section 4 of the Statute of Frauds.
In the more recent of the two cases, Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd [2012] EWCA Civ 265, Tomlinson LJ said that it was common ground that an electronic signature was sufficient and that “a first name, initials or perhaps a nickname will suffice”, so long as it is done in a manner that indicates that it is intended to authenticate the document. In that case, the document was an e-mail whose sender had typed his name “Guy” at the foot. However, again, this was in the context of the Statute of Frauds rather than the 1989 Act.
Would the position be the same where the e-mail template automatically adds the sender’s “signature block” comprising the sender’s name, position and contact details, as is commonly the case? The Law Commission thought that this too would constitute an effective signature. However, in the other recent case, Mehta v J Pereira Fernandes SA [2006] EWHC 813 (Ch) – five years after the Law Commission’s advice – the court said that a typed name that was added automatically did not amount to a signature for the purpose of a guarantee. This view seems preferable.
Scanned signatures
Some documents may bear a signature that has been scanned in, to give the impression that a person has signed it. Unlike a machine-written signature, it is unlikely to be mistaken for a genuine signature. The Law Commission observed that a document incorporating a scanned manuscript signature is capable of indicating to the recipient that the signatory had the necessary authenticating intention, in the same way an original manuscript signature would. While this might be appropriate for a commercial document, there is no case law yet to support it in relation to a property contract.
Making land contracts
Ramsay is the latest example of a case where a guarantee has been held to be valid even though the guarantor’s signature was not handwritten. Contracts for the sale of land are made intentionally through the exchange of signed agreements, or occasionally arise inadvertently through informal signed writing. While case law will no doubt develop further, it is wise to resist suggestions that a signature could be scanned into a contract, or (a topic for another day) that a faxed or scanned signature page could be attached by way of signing. The word “signed” should have “a meaning which the ordinary man would understand it to have”, according to Peter Gibson LJ in Firstpost. As regards inadvertent contracts, the best advice is never to forget the magic words “subject to contract”, just in case.
Peter Williams is a training consultant with Falco Legal Training and Alan Riley is a property law consultant
