Execution of contract: Whether an electronic email signature is sufficient to deem satisfactory execution of a contract (Neocleous v Rees 2019)

Addressing whether an automatically generated email signature is considered as being signed for the purposes of satisfying section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.

The background

Neocleous v Rees [2019] related to the negotiation of terms between parties pursuant to a dispute over rights of way. The defendant had made an application to the Land Registry to register a right of way over the claimants’ land; the claimants’ objection was then referred to the First-tier Tribunal.

Prior to the FTT hearing, the parties negotiated to attempt to reach a settlement. The defendant’s solicitor sent an email to the claimants’ solicitor, proposing the purchase of subject land for an expressed sum. The email did not contain a physical signature but did contain an electronic signature stating the solicitor’s name, position and firm details.

In reply, the claimants’ solicitor agreed to the proposal; this email also contained an electronic signature containing name, position and firm details. The defendant then refused to action the settlement terms, and the claimants sought a determination in the County Court as to whether the requirement of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 that a document be ‘signed’ had been met, creating a binding contract which could be enforced through specific performance.

The decision

The County Court judge held that the construction of the emails between solicitors was sufficient to constitute a binding contract. Rather than requiring a physical signature, the judge addressed whether the electronic signature was applied with ‘authenticating intent’. Even though the email signature was included automatically, the Court found that the parties had consciously included their signatures, thus establishing ‘authenticating intent’.

The contract was therefore enforceable, and the judge made an order for specific performance in favour of the claimants.

Analysis & advice 

Whilst helpful in allowing negotiations to progress electronically, reflecting modern practices, this case does present a warning that, even where documentation is not formally signed with a physical signature, communications made via email may be found to constitute a binding agreement where emails are concluded with automatic electronic signatures.

Parties are advised to state that communication is ‘subject to contract’ where negotiations are yet to be concluded formally.