Court Of Appeal settles question over email contracts

The Court of Appeal has ruled that a series of emails between shipping professionals were a “document” and that their email sign-offs were signatures so that the contract of guarantee created by the emails was enforceable says Geoffrey Sturgess, IT lawyer.

It has long been settled, but perhaps not well understood, that a contract can be created by email exchanges. This is not particularly surprising given that an enforceable contract, can in most cases, be made verbally. The difficulty there is proving its existence.

Certain contracts, however require signature, and there has been doubt whether an email signed, say “Fred”,. fulfils that requirement unless it is “authenticated”. Authentication entails a complex procedure not available to most of us.

Guarantees of another’s liabilities are a case in point. They are still governed by The Statute of Frauds 1677, “An Act for prevention of Frauds and Perjuries. For prevention of any fraudulent Practices which are commonly endeavoured to be upheld by Perjury and Subornation of Perjury”. It prohibits enforcement of guarantees “unless the agreement upon which such Action shall be brought or some Memorandum or Note thereof shall be in Writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorised”.

Geoffrey Sturgess said “Although the legal effect of email correspondence has long been accepted there has been continuing doubt whether anything other than an authenticated signature would constitute “signing” for legal purposes”,

In the case of Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd and another [2012] EWCA Civ 265 (09 March 2012) the question to be decided was whether a series of emails between shipping professionals were a “Memorandum or Note” and secondly whether they were “signed”.

The Court held that collectively they were a memorandum or note and that they had been signed even though the signatures were informal sign offs at the end of the emails and were not authenticated.

Geoffrey commented: “This makes good sense but underlines the importance of ensuring that members of staff appreciate that their emails can have this effect. As emails are often used informally it may be sensible to incorporate into terms and conditions, or email footers, a statement that they are not to have legal effect unless they state explicitly that they are to do so”.

ENDS

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