Under the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989), land contracts must be made in writing (s. 2(1)) and signed (s. 2(3)). This has traditionally meant a 'wet ink' signature, and the law of property has been slow to accept electronic signature. Now, however, a recent case has ruled that a solicitor's automatic email sign off satisfied s. 2(3) LP(MP)A 1989, thereby completing a compromise contract.
Neocleous and another v Rees  EWHC 2462 (Ch)
Following a dispute over a right of way over land owned by the defendant Rees, the claimant Neocleous offered to buy the disputed piece of land for £175,000. After receiving instructions from the defendant, their solicitor accepted the offer and sent an email to the claimant's solicitor confirming the agreed terms of the settlement.
The defendant's solicitor signed off the email with the message "Many thanks" followed by his automatic email signature, which included his name, position, firm's name and contact details, to which the claimant's solicitor replied to confirm his agreement.
The claimant asserted that this constituted a binding contract. The defendant claimed that the parties had not finalised settlement terms and, in response, the claimant sought specific performance of the alleged compromise contract.
Ruling for the claimant, the court found that the relevant email had been signed on the defendant's behalf in accordance with the requirements of s. 2(3) LP(MP)A 1989. The claimant was therefore entitled to enforce the contract.
In particular the court found that:
- The Microsoft Office signature function is used with the intent that it will automatically create a signature at the bottom of every email and most ordinary people would consider this to be a signature.
- Although an email footer is created automatically, setting up the signature involves the conscious action of a person. Further, recipients have no way of knowing whether details are added automatically or manually.
- The fact that the defendant solicitor had used the words "Many thanks" before the footer showed an intention to connect their name in the footer with the contents of the email. Their name and contact details were also positioned at the end of the document, in the conventional style of a signature.
How Does This Impact You?
- The court's ruling reflects the Law Commission's 2019 statement that an electronic signature is capable of executing a document in law, provided that the person signing it intends to authenticate the document and any relevant formalities relating to its execution are satisfied.
- Parties should ensure they negate the possibility of becoming inadvertently bound through pre-contract exchanges of email, by heading pre-exchange correspondence with "subject to contract" or similar wording. Parties should make suitably clear in email footers that their sign-off is not intended to stand as the sender's signature.
- Representatives should also consider telling the other side at the beginning of negotiations that they do not have authority to bind their clients, to make clear that email discussions are not intended to have binding effect, even if found to contain a valid signature.
For further guidance on the complexities of land contracts, get in touch with our commercial property Partner Mark Hughes on 020 7665 0922, or complete the form below.