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07 November 2019

175: Can you sign a binding property contract using an electronic signature in an email?

In Neocleous v Rees, a property contract contained in a series of emails has been held to have been validly signed by a solicitor on behalf of his client, using the automatic sign-off at the foot of the email.

Following a dispute over a right of way, the claimant Neocleous agreed to buy out a plot of land from Rees to settle the proceedings. The parties’ solicitors agreed in an exchange of emails to compromise the dispute by a transfer a small piece of land adjacent to Lake Windermere from Rees to Neocleous in consideration of £175,000.

The email from the Rees’ solicitor to the Neocleous’ solicitor was as follows:

Dear Daniel,
Further to our telephone conversation I am pleased to confirm that terms of settlement between our respective clients have been reached on the following basis:
(1) Your clients will pay to my client the sum of £175,000 (one hundred and seventy five thousand pounds – ‘the Settlement Sum’) for the transfer of my client’s jetty / boat landing plot / mooring (which is contained within title number CU67453) (the Land) to Mr and Mrs Neocleous and the release of my client’s right to pass and re-pass over the land used as a road and coloured brown on the conveyance dated 1 June 1945 between Poole (1) and Wootton (2) (the 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 then advise the Tribunal.
Many thanks
David Tear
Solicitor and Director
For and on behalf of AWB Charlesworth Solicitors

The solicitor acting for the Neocleous replied by email and agreed. The Neocleous’ sought specific performance of the agreement to force a transfer of the land.

The Rees’ tried to argue that the email exchange between the solicitors did not satisfy the requirement in section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 that a contract for the sale of an interest in land has to be signed by or on behalf of each party.

This was because the purported signature by Rees’ solicitor on an email, setting out the main terms of the settlement agreed between the parties, arose from the automatic generation of an email sign off at the foot of the email.

Decision

The court held that, in order for a contract to be signed a wet ink signature is not needed. The Law Commission have also advised that what is required is that a name is added with authenticating intent. The fact that an email sign off was added automatically to the email did not mean there was no authenticating intent.

In fact, the intent of the parties in this case was not disputed and both parties agreed that the solicitors had power to enter in an agreement. The issue to be resolved was whether an email sign off can legitimately constitute a signature to a property contract.

With the authenticating intent established, there was an enforceable contract and an electronic signature was held to be binding.

How to avoid inadvertently creating a binding contact

The takeaway point from this ruling is that we should be mindful that where there is any risk that an email or chain of emails could constitute a binding contract, we should always make sure such correspondence is marked ‘subject to contract’.

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