Don’t put your ‘footer’ in it when it comes to contracts!

It is important to remember that as a general rule under English law, and subject to a number of exceptions, a contract does not need to be signed or even be in writing.

Some of these exceptions include a contract where it relates to land or, is a guarantee or, is made by a deed.  Many businesses often think they must sign on the dotted line to seal a deal but in reality, all that is required is a clear agreement and intention.

In a recent case, the court decided that an automated email footer (including the writer’s name) could be enough to form a binding contract and amounted to an electronic signature.

With the use of e-signatures being recognised in the courts, it means that on a daily basis businesses could be inadvertently entering into contracts with suppliers or customers. Businesses should be aware that a typed name or click of a button could be enough to seal the deal.

In another recent case involving Athena and Superdrug, it was decided that the wording ‘Please go ahead with the below’ was enough to create a binding contract. On this occasion, the court ruled that Athena, in the course of the email exchange, had relied on the Superdrug employee’s confirmation as binding legal intent to form a contract.

This is a stern warning to businesses to review their current practices.

In addition to emails, care needs to be taken with other more informal means of communication whether through WhatsApp or other messaging platforms that are frequently used when negotiating contracts. It is important for companies to understand all the different circumstances in which an exchange may be considered binding. Ensuring that employees are adequately trained and having clear processes and controls in place should be top of the agenda to avoid such pitfalls.

If you have any concerns about your business or the training of your employees, please get in touch with one of our corporate and commercial solicitors who will be able to advise you.