In the recent case of Neocleous v Rees [2019] EWHC 2462 (Ch), it was held that an email chain, bearing automated electronic signatures, amounted to a document signed by the parties (or their agents) and therefore a binding contract for the sale of land.
Legislation
Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (‘the Act’) sets out the requirements that must be complied with before a contract ‘for the sale or other disposition of an interest in land’ is created, these are:
- The contract must be in writing;
- Incorporates all of the terms which the parties have expressly agreed;
- In one document, or where contracts are exchanged in each; and
- Must be signed by or on behalf of each party to the contract.
Neocleous v Rees
Case details
The background to the case is that the parties were involved in a dispute about the defendant (Rees) claiming the benefit of a right of way over land owned by the claimants (Neocleous) in the Lake District. To settle the dispute, it was proposed that the claimants would buy from the defendant the area of land that benefited from the said right of way. The terms of the sale were outlined by the defendant’s solicitor in an email (which included the price, the property to be sold and the requirement to use best endeavours to complete as soon as possible). The defendant’s solicitor’s name and details were noted in the footer of the email (like most professional’s email footers). The claimant’s solicitor (who also had their name and derails at the footer of his email) confirmed agreement by replying to the email.
However, the defendant then applied to have the right of way case re-listed and stated that the terms of the sale of land had not been completed, which the claimant contested.
Manchester County Court considered whether this email exchange constituted a contract for the sale of land. The Judge held that the two emails (which, combined together to form an email chain) amounted to a single document which had been signed by the authorised agents of the parties by their automated signatures at the foot of each email.
The Judge also held that the presence of the defendant solicitor’s name “indicates a clear intention to associate oneself with the email – to authenticate it or to sign it”. The defendant’s solicitor also used the words “many thanks” immediately before where his signature would be produced and this showed an intention to connect the name with the contents of the email. The Court held that a binding agreement of compromise, involving a transfer of land, had been entered into and granted a finding of specific performance.
Comment
As a result of this case a concern that may arise from the recent publication of the Law Commission’s report on “Electronic execution of documents” (Law Com No 386) is that merely typing a name into a contact may be regarded as a signature for the purposes of section 2 of the Act. Therefore, it is so important that care and thought is given before sending emails negotiating terms or electronically signing documents.
This case also highlights the importance of clients, agents and solicitors communicating on a ‘subject to contact’ basis to ensure that they do not become immediately bound to a contract for the sale of land.
How can Nelsons help?
Sarah Burns is a Solicitor in our expert Commercial Property team.
If you require any advice in relation to the subjects discussed in this article, please contact Sarah or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.