Take care with electronic signatures…..
A court judgement that documents signed electronically can have legal force means individuals and companies should take care.
Pam Virdee, a Solicitor in the Commercial Property department at Thursfields’ Birmingham office, was commenting after a county court ruled that an automated electronic signature used in a transfer of land was valid because this was “the intention of the parties at the time”.
The court decided that the automated nature of the signature did not prevent it from authenticating this intention and ordered that the transfer of land should go ahead.
Pam advises the public and companies should now double-check their intentions when using electronic signatures.
She said they should also give clear instructions to those acting on their behalf by confirming the extent of their authority to utilise the documents .
Pam warned: “This decision highlights how careful we all need to be when using our electronic signatures in email chains, as the risk of doing so appears to have just increased.”
In the case of Neocleous v Rees, the court heard the defendants had agreed to transfer part of their land to the claimants for £175,000, and the terms of the agreement were recorded in a chain of emails sent between the parties’ solicitors.
Each email in the chain was signed off using an automated corporate signature tool which recorded the name, role and contact details of the solicitors.
Pam explained: “The law states that a contract for the sale of land must be in writing, incorporating all the terms of the contract and that it must be signed by or on behalf of each party.
However, the claimants argued that the email chain comprised a contract even though it had been signed by the insertion of an automatically generated footer.”
The court had referred to a recent Law Commission report that argued an electronic signature is capable in law of being used to execute a document, provided the person signing the document intends to authenticate the document.
Pam said: “The court also found it relevant that the solicitor involved had typed ‘Many thanks’ at the bottom of his email, indicating he was relying on the automatic footer to sign off his name and an intention to link the email contents to his name.
In law, the test is whether the name was applied with authenticating intent, and in this case the court decided this was clearly established and therefore the contract was enforceable.
The case highlights the willingness to accept the Law Commission’s recent report on the validity of electronic signatures.”
Pam stressed that this case will not bind other courts as it is only a county court judgment, but she added: “Unless there is further case law or legislation, senders of emails will need to consider whether to include disclaimer wording or expressly make email chains ‘subject to contract’ to avoid inadvertently producing a valid and binding contract.”
Contact Pam Virdee on 0121 312 5174 or firstname.lastname@example.org