[2006] EWHC 813 (Ch)
Chancery Division: Ch D
Is an email address a signature? This case concerns the formation of a contract of guarantee. In order to form a contract of guarantee the guarantor MUST sign the acceptance. If this case had been for other types of contract would the court have held that a contract had been formed?
Judge Pelling QC
Introduction
2 JPF is a Portuguese company that supplies bedding products. It supplied such products in July 2002 to Bedcare (UK) Ltd ("Bedcare") a company of which Mr Mehta was a director. Bedcare failed to pay for the products it had received and ultimately it was wound up on JPF's petition by an order made on 7 March 2005.
3 The relevant history begins with the presentation of a winding up petition by JPF on 12 January 2005. On 20 February 2005, Mr Mehta asked a member of his staff to send an e-mail to JPF's solicitors in the following terms:
"I would be grateful if you could kindly consider the following. If the hearing of the petition can be adjourned for a period of seven days subject to the following. (a) A personal guarantee to be given in the amount of £25,000 in favour of your client-together with a list of my personal assets provided to you by my solicitor. (b) A repayment schedule to be redrawn over a period of six months with a payment of £5,000 drawn from my personal funds to be made before the adjourned hearing. I am also prepared to give a company undertaking not to sell market or dispose of any company assets without prior consent from your client pending the signing of the personal guarantee."
The e-mail was not signed by Mr Mehta but is described in the header as having come from Nelmehta@aol.com...
4 The evidence in support of the application for summary judgment was given by Ms Albaster in a witness statement dated 21 June 2005. Ms Albaster is a clerk employed by JPF's solicitors. At para 7 of her statement, she says that when she received the e-mail referred to above, she telephoned Mr Mehta, accepted his proposal and agreed to adjourn the hearing of the petition which in the event was adjourned for a period of 14 days. Ms Albaster continues:
"Although I sent the defendant an agreement to cover the instalment payments and personal guarantee, I heard nothing further from him, he never returned the documents and he did not pay the £5,000 which had been promised from his personal funds."
5 ... In essence, [Mr Mehta] says the claim against him should fail because JPF has failed to produce any signed agreement or personal guarantee and that the only maintainable claim that JPF has is against Bedcare.
The issues in the appeal
8 The only issue of substance that was considered by the district judge concerned the assertion by Mr Mehta that there was no guarantee signed by Mr Mehta. The district judge concluded that the e-mail I have referred to in para 3 above was sufficient to satisfy the requirements of the Statute of Frauds 1677. He said: "The e-mail document in itself is the guarantee." He concluded that the presence of Mr Mehta's e-mail address on the copy of the e-mail received by JPF's solicitors constituted a sufficient signature for the purposes of section 4 of the Statute of Frauds 1677 and he entered judgment accordingly.
9 Section 4 of the Statute of Frauds provides:
"no action shall be brought... whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriages of another person... unless the agreement upon which such action shall be brought, or some 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."
It follows that: the agreement in question must be in writing or, if the agreement is made orally, there must be a memorandum or note evidencing the oral agreement; the agreement or memorandum must be signed by either the guarantor, or someone authorised by the guarantor to sign the agreement or memorandum on his behalf. The effect of a non compliance with section 4 is that the contract is unenforceable.
10 There were thus two issues that were argued at the hearing of the appeal namely: (1) whether the e-mail constituted a sufficient note or memorandum of the alleged agreement for the purposes of section 4; and (2) assuming the e-mail was a sufficient note or memorandum, whether it was sufficiently signed by or on behalf of Mr Mehta, it being contended on behalf of JPF that the presence of the e-mail address on the copy of the e-mail received by JPF's solicitors was a sufficient signature for these purposes.
Was the e-mail a sufficient note or memorandum?
11 The e-mail relied on contains an offer. That this is so is apparent from the opening words of the operative part which starts with the words "I would be grateful if you could kindly consider the following. If the hearing of the petition can be adjourned... subject to the following..." It is also apparent from the fact that the e-mail contemplates that formal documents will be entered into by the use of the phrase "pending the signing of the personal guarantee". It is clear from the evidence of Ms Albaster that it was regarded as such...
12 As a matter of first impression, such a document ought not to be sufficient to constitute a memorandum for section 4 purposes. I say this because what has to be signed under section 4 is "the agreement upon which such action shall be brought or some memorandum or note thereof". As Cave J said in Evans v Hoare [1892] 1 QB 593, 597 the effect of these words is that "there must be a memorandum of a contract, not merely a memorandum of a proposal". However, that is not the way the law appears to have developed. I was referred to the current edition of Treitel, The Law of Contract, 11th ed (2003). Sir Guenter Treitel says, at p 184: "an offer signed by one party and orally accepted by the other... has been held sufficient." That this is the current state of English law is acknowledged (in relation to the old law under section 40 of the Law of Property Act 1925) in Chitty on Contract, 29th ed (2004), vol 1, para 4-027 where, however, it is described as "exceptional".
16 ... the logic underlying the authorities I have referred to would appear to be that where (as in this case) there is an offer in writing made by the party to be bound which contains the essential terms of what is offered and the party to be bound accepts that his offer has been accepted unconditionally, albeit orally, there is a sufficient note or memorandum to satisfy section 4. I say nothing about the position where there is a dispute as to whether or not the written offer has been accepted orally. Such a situation does not arise on this appeal. In the result, subject to the signature issue to which I turn below, I conclude that the e-mail referred to in para 3 above is capable of being a sufficient note or memorandum for the purpose of section 4 because it is in writing, and it is not disputed by Mr Mehta that the offer was accepted orally on behalf of JPF as described by Ms Albaster in... of her witness statement.
The signature issue
18 The e-mail referred to in para 3 above is not signed by anyone in a conventional sense. Mr Mehta's name or initials do not appear at the end of the e-mail or, indeed, anywhere else in the body of the e-mail. Inevitably, therefore, JPF must contend that the presence of the e-mail address at the top of the e-mail constitutes a signature sufficient to satisfy the requirements of section 4.
20 It is submitted on behalf of JPF that the appearance of the sender's address at the top of the document constitutes a signature either by the sender or by "some other person thereunto by him lawfully authorised" because it is well known to all users of e-mail that the recipient of the e-mail will always be told the e-mail address of the e-mail account from which the e-mail is sent in the form it appears on the e-mail referred to in para 3 above. That being so, it is submitted that by authorising an agent to send an e-mail using the sender's e-mail account, to a third party the sender knows that his her or its e-mail address will appear on the recipient's copy and that is sufficient for it to be held to be a signature for the purposes of section 4.
27 ... it seems to me that a party can sign a document for the purposes of section 4 by using his full name or his last name prefixed by some or all of his initials or using his initials, and possibly by using a pseudonym or a combination of letters and numbers... providing always that whatever was used was inserted into the document in order to give, and with the intention of giving, authenticity to it. Its inclusion must have been intended as a signature for these purposes...
29 I have no doubt that if a party creates and sends an electronically created document then he will be treated as having signed it to the same extent that he would in law be treated as having signed a hard copy of the same document. The fact that the document is created electronically as opposed to as a hard copy can make no difference. However, that is not the issue in this case. Here the issue is whether the automatic insertion of a person's e-mail address after the document has been transmitted by either the sending and/or receiving internet service provider constitutes a signature for the purposes of section 4.
30 In my judgment the inclusion of an e-mail address in such circumstances is a clear example of the inclusion of a name which is incidental in the sense identified by Lord Westbury in the absence of evidence of a contrary intention. Its appearance divorced from the main body of the text of the message emphasises this to be so. Absent evidence to the contrary, in my view it is not possible to hold that the automatic insertion of an e-mail address is... "intended for a signature". 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. In those circumstances, I conclude that the e-mail referred to in para 3 above did not bear a signature sufficient to satisfy the requirements of section 4.
Conclusion
32 In those circumstances, whilst I conclude that the e-mail referred to in para 3 above is in principle capable of being a section 4 note or memorandum notwithstanding that it contains an offer and thus came into existence before not after the contract which it is said to memorialise, it does not bear the signature within the meaning of section 4 of the Statute of Frauds 1677 of either Mr Mehta or his duly authorised agent. Accordingly, I allow the appeal and dismiss the application for summary judgment on the guarantee point.