Although most contracts do not need to be signed to be effective (and legally binding), guarantees are an exception.

The 1677 Statute of Frauds requires all guarantees to be:

  • in writing (or a note of memo of it is in writing)
  • signed by the guarantor.

This distinction means oral guarantees (‘I’ll see you right’) cannot be relied on [Actionstrength v International Glass 2003]. It means that draft guarantees which are orally agreed cannot be enforced [Investec v Zulman 2010]. But guarantees by email can be enforced, provided the emails are signed.

Email signatures

For signature, all that is required is that the name of the guarantor (or someone authorised by them) is written or printed on the document. This includes automatically generated email sign-offs and any other electronic signature.

In a transaction worth $54m you would have thought the parties and their brokers would have paid proper attention to the detail… instead they ended up arguing over whether an exchange of emails, with an email sign-off by a broker, attaching a guarantee, was valid and met the requirements of the Statute of Frauds.

The validity of electronic signatures was accepted by the parties and is not in doubt.

Although the email was not itself the guarantee, it was a signed memo or document recording the guarantee. The affixing of an email sign-off authenticated the attached guarantee. The emails were validly executed documents, whatever the parties tried to argue!

What should you do?

Be aware that emails have the same effect as a paper-based letter sent in a posh envelope.

So write them clearly, edit them ruthlessly and send them wisely.

Case: Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd and Anr, [2012] EWCA Civ 265

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