The Power of Electronic Signatures
In a recent County Court case, Neocleous v Rees  EWHC 2462 (Ch), the court considered for the first time whether a land contract could be signed electronically.
HHJ Pearce held that an automatically generated email footer, which contained the name, role and contact details of the sender, did constitute a signature under section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989 (“LPA 1989”).
Traditionally, land contracts have had to be in writing and signed under section 2 of the LPA 1989. However, for the first time this case demonstrates that there may be a willingness on the part of the courts to accept electronic signatures in appropriate circumstances. This is something that was considered by a Law Commission consultation in August 2018.
The background to the issue
The parties in this particular case were initially involved in a right of way dispute with proceedings issued in the First Tier Tribunal. During the course of those proceedings the parties agreed terms for a settlement by way of an exchange of email correspondence. The settlement involved Neocleous purchasing part of Rees’ land. However, they did not formalise the settlement by lodging an order with the Tribunal. Rees’ solicitor then told the Tribunal that the parties had not settled the terms of the agreement and the Tribunal then relisted the matter for a hearing. Neocleous disputed this and claimed there was a binding agreement already in place.
Neocleous then brought proceedings against Rees seeking specific performance of the contract that he alleged had been formed as a result of the settlement negotiations. Neocleous claimed that the chain of emails sent between the parties’ solicitors constituted a contract and that each party was bound due to the electronic signatures contained in the footer of the emails. Rees argued that the contract was unenforceable as the electronic signatures on the emails did not fulfil the signature requirements under the LPA 1989.
The specific issue in this case was whether the automatically generated signatures contained in the footer of the emails were sufficient to demonstrate a signed agreement/contract between the parties. Although academics have discussed this type of scenario previously on an academic basis, this is the first reported case that has dealt with the question of automatically generated email signatures. Previous cases have considered email signatures which are manually inserted at the end of an email and have found that by manually inserting a signature at the end of an email such a document was considered to be signed under the LPA 1989 but had not considered the status of automatically generated signatures.
What constitutes a “signature”
The court held that as the email footer contained the name, occupation, role and contact details of the email’s sender, its purpose was to authenticate the email’s origin and who sent/wrote it. The court also found that although the signature was automatically generated, creating that rule and incorporating the necessary information in the sender’s email settings had involved a conscious action and the inclusion of the name was for the purpose of giving authenticity to the document. It would be difficult for the receiver of the email to distinguish between footers that were inputted manually versus those that were automatically generated. Therefore, due to the authenticating purpose of the email’s footer, the court held that a binding contract had been formed and signed by the parties.
The judgment demonstrates that an automatically generated signature in an email’s footer can be capable of constituting a signature in a land contract. Although the judgment is not binding on other courts and their decisions, as it was made by the County Court, it provides a glimpse into the potential future for electronic signatures particularly in contracts for the sale of land.
The judgment also provides guidance about the use of automatically generated email footers. Where parties are negotiating agreements by email, they should be aware that any email footer, including those that have been automatically generated, could constitute a signature for the purposes of creating a binding contract. The parties could negate their intention to be bound through a chain of emails by ensuring that the emails incorporate a disclaimer, such as the discussions being “without prejudice and subject to contract”.
If you would like more information on this subject, please contact our real estate team.