The law relating to the creation of property contracts has, until now, differed from that relating to other contracts. Contracts for the sale of land had to be created in writing but also in a document signed with a wet ink signature.
The courts have until now been reluctant to acknowledge the ability of a landowner to create a contract by an exchange of emails. The recent case of Neocleous v Rees has however dramatically changed the legal landscape.
The High Court (this is a first instance decision but commentators seem to suggest this decision will be upheld if appealed) held that a string of emails between the parties created an enforceable and binding land sale contract for the purposes of the Law of Property (Miscellaneous Provisions) Act 1989.
The Court concluded that an automatically generated footer at the bottom of the chain of emails amounted to a signature for the purposes of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
This is a groundbreaking case both in terms of the flexibility and speed with which contracts relating to the sale of can potentially now be exchanged but also in terms of the peril which lies in wait for the unwary where they unwittingly enter into a sale contract.
The well worn wording “subject to contract” or something similar should be incorporated in the heading of any emails which negotiate the terms of a transaction. Ideally, similar wording ought to be incorporated within any automatically generated footers, possibly accompanied by a statement to the effect that pending the completion of legal formalities by documents being signed by hand, any exchange of emails is not intending to be legally binding.
If you have any queries concerning the points raised in this blog, please contact me.