A recent ruling in a case related to the sale of property could have wider implications as to what constitutes a ‘signature’ when creating a binding contract.
The background of Neocleous & Anor v Rees  EWHC 2462 (Ch)
Rees owned a piece of land, a landing plot, which could only be accessed via land owned by Neocleous. Rees’ property deeds contained a ‘right of access clause’ but Neocleous’ property deeds did not. In summer 2014 Neocleous started to refuse Rees, her family and friends use of the right of way to gain access to the landing plot.
Rees applied to the courts to enforce her right of way. Neocleous objected, disputing the existence and/or the extent of a right of way. The case was referred to the First-Tier Tribunal in February 2017 and following disclosures from both parties a hearing was listed, commencing with a site visit on 26 March 2018, and the hearing to take place on 27 – 29 March.
Settlement discussions took place between the legal representatives in order to seek an agreed solution prior to the hearing. During these discussions it was proposed that Neocleous purchased the landing plot from Rees. Negotiations regarding this possibility took place via email conversation between the two legal representatives.
Almost every email sent by Tear (acting for Rees selling the property) contained an email signature containing:
Solicitor and Director
For and on behalf of AWB Charlesworth Solicitors
And his contact details.
This included an email responding to an offer to accept £175,000 in respect of the purchase of the property. This email contained terms of a settlement. Wise (acting for Neocleous buying the property) replied confirming agreement to the terms of settlement. The email concluded with an email signature containing:
Daniel Wise – Associate
Dispute Resolution for and on behalf of Slater Heelis LLP
And his contact details.
Following this email, Tear spoke to the tribunal to inform them that the matter was resolved and was advised that a consent order would be required. Tear advised Wise of this and that he would prepare the order and email it to Wise.
Tear emailed the first draft of the consent order to Wise for approval with a heading ‘Subject to Contract’. A few days later Wise responded ‘Without Prejudice and Subject to Contract’ with amendments to the consent order and enquiring about the removal of some items owned by Neocleous.
No response to this email was received from Tear, but Tear wrote to the Tribunal asking for the case to be relisted. Following this Wise emailed the Tribunal confirming Neocleous’ stance that the matter had been compromised so there was no basis for relisting. Following this Tear wrote to the Tribunal confirming that Rees’s position was that terms of settlement had not been finalised between the parties and so she wished the matter to be relisted.
As a result on 10 October 2018, Neocleous issued proceedings seeking performance of what they allege is a contract of compromise.
The issue for the Court
The fundamental issue before the court was what constitutes a ‘signature’ in order to form a legally binding contract.
Tear (acting for Rees in selling the property) argued that the contract had not been signed by both parties and therefore was not binding. He argued his signature was not added consciously added by him at the time of sending the emails, but instead was automatically added by his email program (Outlook). The ordinary person would not consider that the appearance of Tear’s name in printed type at the foot of the email means the document is signed, in particular where it is automatically generated.
Wise (acting for Neocleous in buying the property) argued that in the modern age an email signature is capable of being a valid signature for the purposes of agreeing a contract. The signature does not have to be an image of an ink signature but does need to have the purpose to authenticate or sign the email.
The court determined that an ‘ordinary person’ in today’s age would consider that what is produced when a person stores a name and contact details in the Microsoft Outlook ‘signature’ function, with the intent that it is automatically posted on the bottom of every email, constitutes a ‘signature’ for contract purposes.
The ‘automatic’ application is misleading as a person makes a conscious decision to input the relevant information into the program and determine how it will be applied to outgoing emails.
What is more important today is whether the purpose of adding the ‘signature’ is done with the intent of authenticating the content.
The inclusion of a phrase like ‘Kind regards, or ‘Many thanks’ indicates that the sender is aware that a signature will be added to the bottom of the email.
The court concluded that Tear signed the relevant email on behalf of Rees. Given the common ground between the two parties on other issues, Neocleous is entitled to performance of the contract as requested. Rees must transfer the property to Neocleous for the purchase price of £175,000.
What this Means
While this case is based on the law relating to property, it is a useful reminder for those of us who negotiate terms of employment or dismissal via email as to what constitutes a ‘signature’. We all make use of the automatic signature feature on our email programs. It makes life easier (and quicker) if we don’t have to constantly type our sign-off on every email we send. However, we must be conscious of the fact that, by using this facility, the automatically generated signature indicates that we authenticate and approve the contents of the email. In most cases it will be assumed that, if we are writing the email, we have the authority of our employer to make the offer contained within. These facts combined would likely result in the contents of any email making an offer of employment or dismissal terms being seen as binding unless there is a clear indication contained within the email to the contrary.