Property contracts could be created by email, High Court judge suggests

A chain of emails is "the electronic equivalent of a hard copy letter signed by the sender being itself signed by the addressee," Mr Justice Richards said in his ruling.

However the exchange, which related to a property loan between two sisters, could not be enforced as it did not refer to all the agreed terms, the judge said.

Contracts to sell, let or mortgage land must be made in writing, must refer to all the agreed terms and must be signed by or on behalf of the people involved. This prevents people accidentally creating legally binding agreements.

The arrangements must also be made in a single document or in two identical documents which are exchanged by the buyer and seller.

Suzy Gillis and Jo Ireland accepted that typing their first names at the end of their emails amounted to a signature and that the email string they had created was the equivalent of a single document.

The judge agreed that this was right "where, as here, the second email is sent as a reply and so created a string, as opposed to being simply a new email referring to an earlier email. It is the electronic equivalent of a hard copy letter signed by the sender being itself signed by the addressee."

A legally binding agreement was not created between the sisters in this case because the email correspondence did not refer to important terms of their agreement and stated that a further, legally binding document, would be drawn up. In addition, the exchange was not expressed in terms that suggested that the sisters were entering into binding obligations.

"However the decision suggests that, if the relevant requirements are met, it might be easier to create a contract relating to land by email than by paper correspondence," said Allyson Colby, a property law expert with Pinsent Masons, the law firm behind Out-Law.com.

"Therefore, parties would be well-advised to ensure that the phrase 'subject to contract' appears prominently at the top of all communications. Another safeguard would be to encourage users to change their practice and use separate emails, instead of creating email strings," she said.