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Contracts and electronic signatures

In recent years the use of electronic signatures has become increasingly common. But how well do they hold up in a court of law?

In commercial transactions it is not always practical for the parties concerned to be physically present at a meeting to sign a contract. It is common for the party who cannot be present, to sign a hard copy contract and then scan and email their executed version to the other parties. The Courts recognise that electronic signatures can include an electronic copy of a person’s handwritten signature as well as electronic lettering typed to signify a signature.

In the case of J Pereira Fernandes S.A. v Mehta [2006] EWHC, an email was sent from Mr Mehta’s email address upon his instruction and on his behalf, giving a personal guarantee in respect of debts owed by his company. When J Pereira Fernandes later tried to enforce this personal guarantee, its enforceability came into question.

For the written personal guarantee to be enforceable it was a requirement that it must be signed by, or on behalf of, the party giving the guarantee.

Whilst the email was sent from Mr Mehta’s email account which quite clearly stated his name in the email address itself, both his typed name and an electronic copy of his handwritten signature were missing from the body of the email.

The Judge, whilst commenting on the enforceability of the guarantee, referred to the following Judgment in Caton v Caton (1867) “if a signature be found in an instrument incidentally only…the signature cannot have legal effect and force which it must have in order to…give authenticity to the whole…” and the Court’s finding was that Mr Mehta’s name only being present in the email address of the sent message, rather than in the body of the email, and most crucially, at the end of the personal guarantee, was insufficient to deem the guarantee enforceable.

The Judge went on to say that if Mr Mehta’s name had been typed at the bottom of the personal guarantee, the position with regard to enforceability would have been quite different. In fact he went on to say that such positioning of a typed signature would have been sufficient to deem the document enforceable.

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