Legal News Flash: Automatic email signatures can create binding contracts

Posted on November 1, 2019

Want to avoid accidentally entering into a contract? Keep reading!

While sometimes a legally binding contract can be created without being signed, or even written down, other contracts do need to be signed in order to be valid, including contracts for the sale of land. And in any situation, a valid signature is an important indicator that a person intends to make an agreement formal and binding. 

In a recent case, a judge found that an automatically generated email signature counted as a valid signature and created a valid contract.

 

What does this mean for your business?

Don’t be deterred from using your automatic email signatures, but be wary when you are negotiating the terms of an agreement by email.  It’s sensible to include disclaimer wording in your email (eg “Subject to contract”) to show that you don’t intend to create a contract when you send the email.

It’s worth being aware that when you have to sign something, you don’t need to use a written signature. The following all count as valid signatures:

A scanned version of your handwritten signature

Typing your name in the relevant place (including at the bottom of an email)

Using a web-based e-signature platform, such as DocuSign.

Clicking an ‘I accept’ tick box on a website

The header of a SWIFT* message (*a secure messaging system used by financial institutions to send and receive information about financial transactions) 

Used correctly, electronic signatures can provide your business with greater flexibility and efficiency. We’ve got guidance on how to sign different types of document, which you can find here

 

The content in this article is up to date at the date of publishing. The information provided is intended only for information purposes, and is not for the purpose of providing legal advice. Sparqa Legal’s Terms of Use apply.