Sign @ the bottom

Is it possible to sign an email in the same way that you would sign a contract, or a cheque?

The issue was recently looked at by the High Court in the decision in Nilesh Mehta v J Pereira Fernandes SA where the Court held that the automatic inclusion of the sender's email address in the email header could not be considered a signature.

The Law Now article linked to below summarises the Court's findings in the case and explains whether contracts or other legal documents requiring a signature can be completed by email.

To view the article in full, please see below:

Full Article

Introduction

In the recent case of Nilesh Mehta v J Pereira Fernandes S.A. The High Court ruled that the header of an email containing the sender's email address does not amount to a signature.

The case was an appeal from the judgment of a district judge giving summary judgment in favour of the Defendant, J Pereira Fernandes S.A. ('JPF'). JPF, a Portuguese bedmaker, originally supplied bedding products to Bedcare (UK) Ltd ('Bedcare') of which the Claimant Nilesh Mehta was a director. When Bedcare failed to pay its debt to JPF, JPF subsequently had Bedcare wound up by an Order of 7 March 2005.

On 12 January 2005, prior to the Order being made, Mehta asked a member of his staff to contact JPF’s solicitors by email. This email offered a personal guarantee by Mehta in the sum of £25,000 together with a repayment schedule, in consideration of JPF adjourning the winding up petition for seven days. There was nothing in the body of the text which could be described as a signature, but the automatic email address header stated the sender was "nelmehta@aol.com".

JPF stated that the email was then confirmed by a telephone call. The winding up petition was, in the event, adjourned for 14 days but at no time did Mehta sign any hard copy agreements or pay any money to JPF. JPF then sought to enforce the personal guarantee against Mehta. Mehta countered that for a guarantee to be enforceable it must be signed, and that he had not signed any document evidencing the guarantee. JPF argued the appearance of Mehta’s email address in the header was a signature. The key issue was therefore whether the email had been 'signed'.

Under English law, the majority of contracts can be formed without any written documentation. In most cases there are no particular formal requirements and, in particular, there is usually no need for contracts to be signed or written. There are some exceptions to the rule, however, and a guarantee is one of them. By virtue of s.4 Statute of Frauds 1677:

1. a guarantee must be in writing, or if the agreement is made orally, there must be a memorandum or note evidencing the oral agreement; and
2. the agreement or memorandum must be signed by the guarantor, or someone authorised by the guarantor to sign on his behalf.

The E-Commerce Directive 2000 requires EU Member States to ensure that their legal systems allow contracts to be concluded by electronic means. This is given effect by the Electronic Communications Act 2000 and the E-Commerce (EC Directive) Regulations 2002. There should therefore be a way in which contracts, such as a guarantee, may legally be concluded by email. But what does ‘signing’ mean in the context of an email?

The Electronic Communications Act 2000 authorises Parliament to issue statutory instruments to modify any statute to facilitate electronic communications. Clearly, an Act passed in 1677 would be a prime target. However, in 2001 the Law Commission suggested a pragmatic approach and stated that a variety of methods were capable of satisfactorily 'signing' an email, including: digital signatures, scanned manuscript signatures or typing one’s name or initials or even a pseudonym into the email.

The Law Commission was able to take a relaxed approach concerning the implementation of the Electronic Communications Act, because of the earlier judgment of the courts in Goodman v J. Eban Ltd (1954). This defined ‘signature’ as "the affixing in some way, whether by writing with a pen and pencil or by otherwise impressing on a document, one’s name or 'signature' so as personally to authenticate the document". The key concept of a signature is not therefore its physical manifestation (i.e. an "X" would suffice), but rather the authentication it provides and the intention of the person signing.

Judge Pelling QC held that the key to deciding whether a document has been ‘signed’ for the purposes of s.4 Statute of Frauds is intention. He agreed with the Law Commission that it does not matter in what form the signature is made. It can be done by typing in your name or by some other method, but, however formed, "its inclusion must have been intended as a signature". In holding this, the Judge drew support from the case of Caton v Caton (1867), in which Lord Westbury said, "if a signature be found incidentally only…the signature cannot have legal effect and force which it must have in order to comply with the statute". The question to be answered by the court was therefore whether the email address header was "incidental" to the document, or whether it was intended to be a signature.

The Judge held that the email address header was not a signature within the meaning of s.4 Statute of Frauds. There was no intention for Mehta’s email address to appear in the email. Even if there was, Judge Pelling QC accepted that Mehta did not intend the appearance of his email address to be a signature. It was merely an automatic process. The Judge drew an analogy in the case with the header on a fax, which automatically shows the name and number of the sender but which could not seriously be said to be a signature. The email address header was "divorced from the main body of the text of the message", and could not be considered part of the guarantee.

In light of this case, it is clearly important to consider very carefully whether an emailed guarantee, or any other written agreement which requires a signature, has been properly signed. The signature itself may include a wide range of acts, ranging from printing a name to using a pseudonym, but crucially the person must have intended by that act to sign the document.

More generally, there does appear to be scope for further argument as to when a written agreement sent by email has been satisfactorily signed. Automatic signature footers, for example, would present a more difficult case. Most automatic signature footers contain the sender’s name and some contact details, but it is debatable whether the intention element would be present if one was added to the end of an email providing a guarantee (or any other contractual document where a signature is required). This judgment strongly suggests that the sender must exert some positive effort, however minimal, properly to sign the document. Alternatively, the person relying on the existence of the signature must show an intention, on the part of the sender, for the automatic signature to be a "signature" in the traditional sense of the word. Proving this "intention" will be difficult in the majority of situations.

It should be kept in mind, however, that the majority of contracts are not required to be in writing and there are no particular completion formalities (e.g. a signature is not required to form the contract). In most cases, the issue in this case of whether a contract agreed via email has been properly ‘signed’ would not arise and there is no issue in completing contracts by email.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

The original publication date for this article was 28/07/2006.