Out-Law Analysis 5 min. read

The law on email signatures moves forward

Electronic signatures automatically generated at the bottom of emails can bind businesses to contracts.

Though the law remains subject to change, a recent court ruling and separate report by the Law Commission in England and Wales highlight how emails are no longer as informal as they used to be.

Businesses worried that automated email signatures might be interpreted as their agreement to a contract can take steps to address that risk. They include notifying parties in a negotiation who is authorised to enter into contracts on their behalf, and inserting the words 'subject to contract' into the body of emails which concern contract terms and their negotiation.

Case law

Over the years, courts in England and Wales have been asked to consider questions concerning the enforceability of emails.

In 2006, for example, the High Court found that the presence of a sender's email address in the header of an email does not amount to a signature. It said, though, that a typed name would have been sufficient to form a binding contract.

In 2012, the Court of Appeal considered the enforceability of an email chain between agents discussing the terms of a guarantee. The court assessed section 4 of the Statute of Frauds 1677, which requires a guarantee to be in "writing" and "signed".

In that case, the Court of Appeal held that the guarantee had been created in writing by e-mail chain, and held that a party can sign a document by using their full name, last name prefixed by initials, initials alone or even a pseudonym or code. According to the court, though, what is important is that whatever is inserted must be done with the intention of giving authenticity to it as a signature. 

The email in question which concluded the guarantee simply contained the name 'Guy', the first name of a broker, Guy Hindley, acting for the defendant in the case. Hindley confirmed he had included his name to indicate it came with his authority and that he took responsibility for its contents. The judge said: "Mr Hindley put his name, Guy, on the email so as to indicate that it came with his authority and that he took responsibility for its contents. It is an assent to its terms. I have no doubt that that is sufficient authentication."

Automatic generation of signature

In a recent case, Manchester County Court considered whether an automatically generated signature at the bottom of a solicitor’s email was adequate to render a document "signed" on behalf of his client. The judge's findings may be persuasive but are not binding on other courts.

At issue in this case was an email exchange between the solicitors of two parties. The emails concerned a settlement agreement between the parties in relation to a disposition of interests in land and therefore the agreement was required to satisfy the formal requirements of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.

The judge considered whether an automatically generated name at the foot of an email was adequate to render the contract contained in a string of emails as having been 'signed' for the purposes of the Act.

Considering the matter, the judge reviewed whether the name was applied with authenticating intent – endorsing the test set by the High Court in 2006.

In relation to the automatic nature of the email signature, the judge explained that the word 'automatic' may tend to mislead, and that at some stage a person entered the relevant information and setting to ensure that the signature would appear in each email and therefore knew that their name was added to the email.

He said: "It is common ground that such a footer can only be present because of a conscious decision to insert the contents, albeit that that decision may have been made the subject of a general rule that automatically applied the contents in all cases. The recipient of such an email would therefore naturally conclude that the sender’s details had been included as a means of identifying the sender with the contents of the email. Since such a footer must have been added either as a result of a conscious decision in the particular case or a more general decision to add the footer in all cases."

He added: "The presence of the name and contact details is in the conventional style of a signature, at the end of a document."

The judge said: "Looked at objectively, the presence of the name, indicates a clear intention to associate oneself with the email – to authenticate it or to sign it."

The Law Commission report

While the judgment in the case before the Manchester County Court is merely persuasive, a report published earlier this autumn by the Law Commission may assist further in dealing with the uncertainty surrounding electronic signatures.

The Law Commission said:

  • An electronic signature is capable in law of being used to execute a document (including a deed) provided that the person signing the document intends to authenticate the document and any formalities relating to execution of that document are satisfied.
  • Such formalities may be required under a statute or statutory instrument, or may be laid down in a contract or other private law instrument under which a document is to be executed.
  • Save where the contrary is provided for in relevant legislation or contractual arrangements, or where case law specific to the document in question leads to a contrary conclusion, the common law adopts a pragmatic approach and does not prescribe any particular form or type of signature. In determining whether the method of signature adopted demonstrates an authenticating intention the courts adopt an objective approach considering all of the surrounding circumstances.

Lessons for businesses

In today’s market there is an ever increasing use of technology within business practices to accelerate and streamline processes. The law is evolving to facilitate this, as we can see from the ability to electronically form contracts and sign them. However, as with all new processes, this requires some thought at the outset to ensure the efficiency and reliability of the process.

As the case law highlighted shows, emails are no longer as informal as they appear. An email, or a combination of emails can satisfy legal requirements and be as binding as any other form of writing and they can also be deemed signed where there is an authenticating intention by the parties or their agents. What constitutes this authenticating intention is judged objectively based on the circumstances.

Businesses should therefore consider who has authority to enter into contracts on their behalf and whether this needs to be clarified generally and/or at the beginning of contract negotiations.

In addition, because a court may consider an automatic signature to show intention, if there is no intention to be bound by the contents of an email this should be made clear. This is often done in practice by the use of 'subject to contract' stated clearly on communications.

Laura McCrea is a Dublin-based contract law expert at Pinsent Masons, the law firm behind Out-Law.

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