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In the recent decision in Neocleous v Rees  EWHC 2462, HHJ Pearce concluded that an email footer was capable of amounting to an electronic signature.
The underlying dispute between the parties arose in the context of a right of way which the Defendant purported to try and exercise over the Claimants’ land. The Defendant applied to HM Land Registry to register a right of way against the title to the Claimants’ property. The Claimants objected to the application and the matter was referred to the First Tier Tribunal.
During settlement discussions, both parties were represented by solicitors; a Mr Daniel Wise (‘Mr Wise’) on behalf of the Claimants and Mr David Tear (‘Mr Tear’), on behalf of the Defendant, explored proposals for settlement. One such proposal involved the Claimants acquiring a plot of land from the Defendant. In this regard:
- Mr Tear emailed Mr Wise following an earlier telephone conversation. This email, in substance, provided the core settlement terms and confirmed agreement for the sale of the land for £175,000. Mr Tear concluded the email with ‘Many thanks’ and his email signature (which included his name, occupation and contact information) followed
- Mr Wise responded confirming his agreement with the contents of Mr Tear’s email. Mr Wise concluded this email with ‘Kind regards, Daniel’ and his email signature (again with his name, occupation and contact information) followed.
Mr Tear made attempts to vacate the First Tier Tribunal on the basis that the parties had agreed the terms of settlement. Mr Tear was advised by the Tribunal that a consent order would be required for the forthcoming hearing to be vacated. No consent order was agreed between the parties and the Defendant subsequently requested that the hearing of the application be re-listed.
The Claimants issued proceedings seeking specific performance of what was termed a ‘contract of compromise’. The Defendant maintained that no contract had in fact been concluded on the basis that: (i) the emails did not evidence an intention to create an agreement for the disposition of an interest in land; (ii) the emails did not include all the terms of the agreement between the parties; and (iii) the emails were not signed by the parties.
After some concessions at trial, the only issue remaining for the court to determine was whether the wording at the footer of email correspondence between the parties’ respective solicitors was sufficient to satisfy the requirement of section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989 (‘the 1989 Act’) which stipulates that:
‘The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract’.
HHJ Pearce concluded that the Claimants were entitled to specific performance of the contract of compromise. In his judgment, HHJ Pearce noted as follows:
- The key question was whether the name (albeit in a footer) was applied for the purpose of ‘authenticating intent’;
- Although the footer was automatically inserted into every email sent by Mr Tear, this was in essence the product of some earlier ‘conscious action’ when the information was originally entered into Microsoft Outlook;
- Mr Tear was aware of the fact that the footer would be included with every email and indeed relied on the footer to sign off his name. Hence, he concluded his email with ‘Many thanks’;
- The presence of Mr Tear’s name indicated a clear intention to associate himself with the email, namely ‘to authenticate it or to sign it’; and
- The sender of an email would be aware that their name is being applied as a footer.
Further, the Defendant’s argument was of course unattractive in that it involved relying on a technical defect when the terms themselves were in essence agreed between the parties.
Although no guidance is provided in the 1989 Act as to what amounts to a signature, HHJ Pearce was assisted, inter alia, by:
- The comments of HHJ Pelling QC in J Pereira Fernandes SA v Mehta  1 WLR 1543. After referring to various modes by which a person can sign a document, HHJ Pelling QC indicated that irrespective of what was used, the determining factor was whether ‘whatever was used was inserted into the document in order to give and with the intention of giving authenticity to it’;
- Article 2(1) of the E-Signatures Directive 1999/93/EC and Section 7 of the Electronic Communications Act 2000, both of which use language of authenticity when seeking to define what an electronic signature is; and
- A Law Commission consultation on the Electronic execution of documents.
Whilst the decision in Neocleous at first glance seems novel, it essentially applies existing principles on electronic signatures to the case of an email footer. Accordingly, the test remains the same, namely whether the name or other print is applied with the intention of authenticating a particular document.
Further, it is also important to bear in mind that the Defendant made two key concessions at trial which meant that the court was only considering the narrow point of the footer serving as an electronic signature. Specifically, the Defendant did not pursue the arguments that: (i) there was no contractual intention at the time of the email exchange; and (ii) the email exchange did not comply with section 2(1) of the 1989 Act. When looking at the decision in context, it is clear that the contract of compromise was specifically enforceable because the requirement for intention and compliance with section 2(1) had also been satisfied. It therefore follows that if the emails were marked ‘subject to contract’, ‘heads of terms’ or otherwise demonstrated a lack of intent, the conclusion may have been different.
Additionally, although the footer appeared automatically, it was not without Mr Tear’s knowledge and it was clear on the facts that he relied on the automatic footer to sign off his name.
In the circumstances, my view is that the decision in Neocleous is a sound application of existing legal principles but also sends a message to the profession that caution should be exercised to ensure that parties do not inadvertently enter into binding agreements.