Learning the Law: Electronic signatures and email

Learning the Law: Electronic signatures and email

The recent County Court decision of Neocleous v Rees [2019] held that an email signature is sufficient for the purposes of creating a valid land contract. With emails now being the normal method of communication for professionals, we consider the impact of this decision for the completion of agreements and on the service of notices and other documents.

Email signatures for land transactions

Section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989 (“LP(MA)A 1989) requires a contract for the disposal of land to be signed by the parties, if it is to be valid. The Courts have previously commented on the validity of electronic signatures for the purpose of section 2 LP(MA)A 1989 (see Firstpost Homes Ltd v Johnson [1995] and Green (Liquidator of Stealth Construction Ltd) v Ireland [2011]). Neocleous v Rees is the first reported case where a court had to specifically decide this issue and it found that an automatically generated email footer constituted a signature for the purposes of Section 2(3).  It is only a County Court decision and therefore not binding on future cases however, it may indicate the likely view of the courts on this question.

In its 2019 report on electronic execution the Law Commission suggested that electronic signatures could be used to execute documents as long as certain formalities were followed, depending on the nature of the contract in question. In making this suggestion the Law Commission clearly recognises that the law needs to catch up with modern methods of communication.

Although the use of electronic signatures can save time, professionals acting on behalf of clients should beware of the risk of unwittingly accepting the terms of a contract simply through the sending of an email. It is common for professionals to state expressly in their automatic email signatures that they do not accept service by email. A similar provision may now be needed to provide that their email signature does not constitute a signature for the purposes of the LP(MA)A 1989.

Service of notices and other property documents by email

Service of documents by email is not a new concept. For circumstances where the Civil Procedure Rules apply, these allow for service of documents to be effected by email as long as the party has expressly stated that they will accept this service and have confirmed their email address.

However, for other property documents such as a notice under a tenancy agreement, the availability of service by email will depend on which statutory regime (if any) overlays the relevant tenancy.

For a tenancy under the Agricultural Holdings Act 1986 section 93 prescribes the service required for any “notice, request, demand or other instrument” and inevitably this does not include email.

For farm business tenancies under the Agricultural Tenancies Act 1995 (“ATA 1995) there is more flexibility; Sections 36 (2) & (3) ATA 1995 expressly provide that electronic transmission of notices or other documents will be ineffective unless given in a manner authorised by a prior written agreement (such as the FBT agreement) between the parties. It should be noted however, that if s1 notices are exchanged, this will occur before the FBT is completed and therefore email service will not be valid for these notices.

Notice provisions in existing tenancies

Many existing tenancy agreements contain a provision which extends the methods of service for notices, but does not mention the service of other documents. If this is the case then some documents, which may be created electronically, will have to be printed off and served either by hand or by post. An example would be the gas safety certificates for residential lettings, which are required to be served on all tenants within 28 days of a gas safety check, which are usually created electronically and emailed to the landlord by the engineer. However, unless the tenancy agreement expressly provides for a wider category of documents to be served by email, then this will have to be served on all the adult occupants in a paper form. Whether emailed or served in hard copy, landlords would be well advised to ensure they obtain confirmation of receipt from the tenant.

To send by email or not?

In a previous article for Agricultural Lore, we considered in greater detail the potential for serving property notices by email (see Learning the law: service of property notices by email).

As is clear from the Law Commission report this is an area of the law that we expect to develop quickly and the decision of Neocleous v Rees signals the start of the Court’s acceptance of electronic signatures.