In the recent case of Neocleous v Rees [2019] EWHC 2462(Ch) an email with an automatically generated signature was considered sufficient to bind the parties to an agreement for the transfer of land in settlement of a right of way dispute. This case is of particular relevance in an increasingly digital age where emails are the most common means of correspondence and where there is an increasing focus on the use of electronic documentation.

Whilst not immediately apparent perhaps from the above this decision and update has application to your role as Landlord, Managing Agent or Property Manager given that you will have all sorts of discussions over email with clients, tenant and leaseholders and thus it is important to understand in what circumstances your otherwise innocent emails might amount to a binding contract for you or your clients.

Fact of the case

In Neocleous, the parties came to a settlement to resolve some existing rights of way. One term of the proposed settlement was that Ms Rees would purchase a small parcel of land from Mr and Mrs Neocleous. As this was a transfer of land, Section 2 of the LP(MP)A had to be complied with.

Section 2 of The Law of Property (Miscellaneous Provisions) Act 1989 (“LP(MP)A”) provides the requirements for a contract for the disposition of an interest in land. It states the following:

Section 2. Contracts for sale etc. of land to be made by signed writing

1.       A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.

2.       The terms may be incorporated in a document either by being set out in it or by reference to some other document.

3.       The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them… must be signed by or on behalf of each party to the contract.

The title to section 2 refers to “signed writing,” and this is further detailed in sub-sections (1) and (3) where it states that the contract must be made in writing and must be signed. However, what does “signed writing” mean in today’s modern times? The Law Commission says that electronic signatures can be used to execute documents. On the basis that “writing” can include electronic communications such as email, would an email footer suffice to constitute signing?

The sale in Neocleous was not documented in any traditional form of written settlement agreement. However, the lawyers did exchange the following emails:

1. Ms Rees’s lawyer to Mr and Mrs Neocleous’s lawyer setting out the principal terms of the intended settlement. Such email also invited confirmation that those were agreed; and

2. A reply from the Neocleous’s lawyer confirming that he agreed with the terms of their email.

Ms Rees later decided that she no longer wished to proceed with the purchase of land; her lawyer argued that there was no binding agreement in respect of this. Mr and Mrs Neocleous maintained, however, that the email exchange between the lawyers was as good as a legally binding contract as the automatically generated email footers from each lawyer (which stated their name, position, firm and contact details) constituted signatures for the purposes of Section 2(3) of the LP(MP)A.

Decision

The Court held that the email footer of Ms Rees’ lawyer did, in fact, render a signing for the purposes of Section 2(3) of the LP(MP)A.

It was further held that, although the email footer was an automatically generated one (i.e., added to every email sent by that lawyer), to apply the rule that a footer of this nature must be added to every email would have to involve the conscious and deliberate act of application in the relevant setting in email was found by the Courts to be further “authenticating intent” that he was relying on the automatic footer to sign off his name. As such, the email exchange between the lawyers was found to have formed a legally binding contract of sale of land.  The Courts further added that the ordinary person would regard an automatically generated email footer as a contractual signature, holding that:

"Many an "ordinary person" would consider that what is produced when one stores a name in the Microsoft Outlook "Signature" function with the intent that it is automatically posted on the bottom of every email is indeed a "signature" … In the current age, that would in my judgment be capable of encompassing the wording of the footer to Mr Tear’s email."

Consequently, the Courts held that email footers, regardless of whether they are automatic, are capable of amounting to signed writing such that the lawyer had indeed signed the email on behalf of his client, thereby establishing a legally binding contract.

Landlords should be aware of “accidentally” granting consent to a request for licence to assign/sublet/alter

Alchemy Estates Limited v Astor [2008] highlights the risk that a Landlord may inadvertently grant consent to a proposed assignment or subletting by entering into correspondence referring to consent “in principle”. In Alchemy the Landlord’s solicitor sent the following email:- 

“Our client in principle is prepared to grant its consent to enable the lease to be assigned to Alchemy Estates Ltd... The conditions attached to the grant of such Licence are:

1. the payment of our client’s reasonable costs incurred in connection therewith;

2. and such Licence is documented within the form of the attached draft Licence to Assign...”  

   The email also contained a clear statement that consent would only be given on completion of a formal licence to assign.  Although the email may appear clear, the Court ruled that consent had been granted, and the email provided the necessary consent to the assignment!  

Final thoughts

Both these cases show the importance of ensuring that great care is taken when drafting informal correspondence, such as emails and even oral conversations, texts and WhatsApp messages. Consideration should be given to whether such correspondence should be marked ‘subject to contract’ if they are not intending to be binding, or whether disclaimers should be used to advise recipients that automatically generated email sign offs should not be interpreted as an intention to authenticate the contents of the emails. However, this is not always appropriate, especially in professional services.

For more information, please contact Kevin Lever at Kevin.Lever@kdllaw.com or on 01435 897297.

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