The recent judgment in Mehta v Pereira Fernandes SA [2006] EWHC 813 (Ch) provides the answer to the question posed by the tile of this article, at least as regards the Statute of Frauds. In short, if you sign an e-mail using your full name or last name, with or without initials or your first name, or even if you use a pseudonym or a combination of numbers and letters with the intention of verifying a communication ,then this will be a valid signature.
An e-mail with just an e-mail address in the ‘From’ field (as inserted automatically by your e-mail client) will not constitute a signature in itself.
While this case did not deal with signature lines (ie the text which automatically appears at the end of an e-mail typically identifying an individual and giving his or her contact details) it would seem that this would not be a signature as it would be an automatic insertion without the necessary intention of giving authenticity to the communication.
If you insert a name or other identifier in an e-mail with the intention that it should act as signature then it will bind you and it need not appear at just the end of the e-mail either.
The judgment dealt with the Electronic Communications Act 2000 in passing.
Background
Mr Mehta was a director of a company to which the respondent had supplied bedding products.
That company failed to pay for the products and therefore the respondent presented a petition for the winding up of that company. Mr Mehta asked an employee to send an e-mail to the respondent’s solicitors on his behalf asking for the petition to be adjourned for seven days on the basis that he would give a personal guarantee. Fortunately for Mr Mehta the e-mail was not signed, unlike other e-mails he had sent. The respondent’s solicitors then called Mr Mehta, accepting the proposal.
Mr Mehta of course failed to pay up and proceedings ensued.
Section 4 of the Statute of Frauds (1677) states:
‘.. no action shall be brought .. whereby to charge the defendant upon any special promise to answer for the debt default or miscarriage of another person .. unless the agreement upon which such action shall be brought or some other 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’.
If s 4 is not complied with then the agreement is unenforceable.
The judge said that the ‘purpose of the Statute of Frauds is to protect people from being held liable on informal communications because they may be made without sufficient consideration or expressed ambiguously or because such a communication might be fraudulently alleged against the party to be charged’.
The problem the respondent had was that the e-mail was not ‘signed’ (in the sense that no name followed the proposal), so it had to argue that the automatic insertion of the e-mail address of the sender (Mr Mehta) was a ‘signature’ for the purposes of the Statute of Frauds.
Unfortunately for the respondent (and its solicitors) it was held that the automatic insertion of an e-mail address was not a signature as it was inserted purely as a function of the technology used.
The judge went on to say that ‘to conclude that the automatic insertion of an e-mail address in the circumstances I have described constituted a signature for the purposes of section 4 would I think undermine or potentially undermine what I understand to be the Act’s purpose, would be contrary to the underlying principle to be derived from the cases to which I have referred and would have widespread and wholly unintended legal and commercial effects’.
Electronic Communications Act
It is worthwhile looking at this Act in a bit more detail. Section 7(2) states:
‘For the purposes of this section an electronic signature is so much of anything in electronic form as-
(a) is incorporated into or otherwise logically associated with any electronic communication or electronic data; and
(b) purports to be so incorporated or associated for the purpose of being used in establishing the authenticity of the communication or data, the integrity of the communication or data, or both.’
The question is whether s 7(2)(b) will be satisfied by the simple inclusion of a name as part of the salutation. For legal proceedings, s 7(1) requires certification as well which, according to s 7(3), requires either a statement to this effect or a ‘procedure applied to the signature’ (a reference to what are commonly known as digital signatures).
The Electronic Signatures Regulations 2002 make a distinction between an ‘electronic signature’, which is ‘data in electronic form which are attached to or logically associated with other electronic data and which serve as a method of authentication’ and ‘advanced electronic signatures’, which are digital signatures.
Digital signatures are therefore admissible in evidence but a signature line containing a simple name without any form of independent verification or certification is not admissible in itself. In this case it would appear that the existence and authenticity of a signature would depend on adducing appropriate evidence, as in the Mehta case. If a document need only be in writing then an electronic signature (rather than a digital signature) will suffice.
After all, if a rubber stamp is enough to bind a party under most contracts then there should be no logical reason why a written name at the end of an e-mail should not bind the sender if that was the intention.
Practical Steps and Issues
All businesses should look at the format of any automatic e-mail signature lines to ensure that a presumption is not created by the insertion of a name (particularly something along the lines of ‘Kind regards, Fred’. Ultimately the signature has to be used with the intention of verifying the sender, so there is some residual protection. Nonetheless, e-mail signature lines across the business should adhere to an agreed format and should include appropriate disclaimers and company registration details.
On a slightly different note, what is perhaps more important is that the sender of the e-mail should have his or her job title properly specified (if it is used at all). In a world where titles are often conferred or used so as to appease individual perceptions of importance (without the formal job title or responsibility to go with it) then that title may constitute ostensible authority to the world at large for any transactions.
If an employee states that he or she is a ‘senior manager’ or ‘vice-president’ and the e-mail is an official communication from the business (as would be the case if the business e-mail address is used) then recipients may be entitled to rely on that title as evidence of authority to bind a company.
All too often a problem arises because an employee doesn’t know what he or she is agreeing to in an e-mail. While there may be an internal issue to be dealt with, potentially leading to disciplinary proceedings or termination of employment, the business may still be liable.
Businesses should also be careful about allowing employees to ‘elevate’ their positions by not challenging the use of an incorrect job title which ascribes a higher level of authority. By not dealing with an issue, an aspirational job title could become an actual job title, followed shortly thereafter by a request for a pay rise no doubt.
Businesses must also bear in mind that an e-mail is a communication and it must comply with all the company law rules identifying a business, such as giving the full company name, company registration number and registered office address.
George Gardiner is the principal of Gardiner & Co., a niche technology firm with a particular interest in complex technology projects and electronic communications.
