Portuguese bed maker J Pereira Fernandes S.A. (JPF)
sought to wind-up a British retailer, Bedcare (UK) Ltd over unpaid
debts. It received an email, appearing to come from Bedcare's
director, Nilesh Metha, offering a personal guarantee of £25,000 if
JPF agreed to adjourn the hearing for seven days. It also proposed
a schedule for repaying the debt over six-months and offered a
payment to account of £5,000.
JPF said that a telephone call followed in which the offer was
accepted. But no money changed hands and documents that JPF sent to
Metha were not returned. Bedcare was subsequently wound up.
JPF tried to enforce the personal guarantee against Metha. A
district court judge accepted its argument and awarded JPF summary
judgment in the sum of £24,985.53 plus costs. Metha appealed.
Metha disputed the debt owing to JPF. But that was not the focus
of the appeal. Instead, the only issue for Judge Pelling QC to
consider was Metha's claim that, because JPF did not produce a
signed agreement or Personal Guarantee, its only claim was against
Bedcare – which was now defunct.
Some laws require that documents are in writing and signed. The
Statute of Frauds and Perjuries, a law dating back to 1677, puts
personal guarantees among them. But the failure of
seventeenth-century lawmakers to foresee the internet does not mean
that such documents require a traditional, hand-written
signature.
The Electronic Communications Act, passed in 2000, empowers the
issuing of statutory instruments to modify any other statute to
facilitate electronic communications. This has not been done for
the Statute of Frauds; but nor is such subordinate legislation
necessary. In 2001, the Law Commission published a paper on formal
requirements for transacting electronically. It took a pragmatic
view.
The Law Commission reasoned that statutes requiring signatures
could be satisfied in most cases by a functional test: whether the
conduct of the would-be signatory indicates an authenticating
intention to a reasonable person. "Digital signatures, scanned
manuscript signatures, typing one’s name (or initials), and
clicking on a website button are, in our view, all methods of
signature which are generally capable of satisfying a statutory
signature requirement," wrote the Law Commission.
Judge Pelling accepted this view. He said that if someone had
typed his name in the body of the email, that would satisfy the
signature requirements of the Statute of Frauds. But in the case
before him, there was no such signature.
He dismissed JPF's argument that the automatic inclusion of
Metha's email address – and its appearance at the top of the email
– constituted a signature. "It is the email equivalent of a fax or
telex number," he wrote. "It is well known that the recipient of a
fax will usually receive a copy that has the name and/or number of
the sender automatically printed at the top together with a
transmission time. Can it sensibly be suggested that the
automatically generated name and fax number of the sender of a fax
on a faxed document that is otherwise a [document covered by the
1677 Act] would constitute a signature for these purposes?"
What was missing was a name. Even initials or a pseudonym might
have sufficed, reasoned Judge Pelling, "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."
Judge Pelling did not have to consider automatic signatures that
email software might be set to attach to every outgoing message.
But he did look at a House of Lords ruling from 1867 in which Lord
Westbury said, "if a signature be found in an instrument
incidentally only … the signature cannot have legal effect and
force".
Judge Pelling suggested that 'incidental' in this context means
"where the name or signature just happens to appear somewhere". He
decided that the inclusion of an email address "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."
A future court case might have to consider whether or not an
automated signature footer is similarly 'incidental'.
The appeal was allowed and the application for summary judgment
on the guarantee point was dismissed.
