Electronic Signatures: Can You Automatically Enter Into A Binding Contract?

As technology advances, the law must keep up. For some time, parties have been able to sign or execute a contract and enter into a binding transaction by using an electronic form of signature. Many emails are also 'signed off' in this way or simply with a 'footer' which includes the name and details of the sender. To what extent are electronic signatures valid, such that a binding contract is entered into? In July 2019 the Law Commission of England and Wales issued guidance on the use of electronic signatures and the recent UK Court decision in Neocleous v Rees held that an email footer was sufficient to constitute a signature and create a binding contract.

More than a signature

It is worthwhile bearing in mind the fundamental elements of a contract. It has long been established that there are three elements required to create a valid, binding contract under the common law: offer and acceptance, consideration and an intention to create binding legal relations. When it comes to acceptance of the other party's offer, the law has established a number of rules. For example, acceptance of the offer must be communicated to the other party. Equally sensibly, silence cannot constitute acceptance.

The July 2019 Law Commission Report on Electronic execution of documents confirms that these elements must be present - it is not just the execution of the contract, whether in writing or electronically, which is relevant. Critically, the Report refers to 'intention' in relation to...