Legalease – guarantees by email?

Under English law, in order to make a guarantee enforceable, it must be in writing and signed by the guarantor (or an authorised signatory on behalf of the guarantor).

In its 9th March 2012 judgement, the Court of Appeal confirmed that a contract of guarantee can be enforceable in circumstances where it is contained in a series of documents (rather than a single document) that bears the signature of the guarantor (or an authorised signatory on behalf of the guarantor).

Specifically, the Court of Appeal looked at a series of emails sent by brokers during the negotiations in relation to a long-term time charterparty.  The final email agreed the outstanding terms but did not expressly repeat the guarantee. The guarantee was however found to be enforceable.

The Court of Appeal held that an e-mail salutation by a broker (if duly authorised to act on behalf of the guarantor) was sufficient to constitute a signature for the purposes of English law (the Statute of Frauds Act 1677) irrespective of the intention with which the broker signed it – i.e. it was not relevant whether or not the broker thought he was signing a guarantee.

Once again, English law is moving with the times – although parties should be careful of  the casual nature in which emails are sometimes treated – as the judgement shows, email correspondence can be held to create binding and enforceable obligations, even in respect of guarantee contracts (which otherwise have more stringent execution requirements than simple contracts).

Case reference: Golden Ocean Group Limited v. (1) Salgaocar Mining Industries PVT Limited and (2) Mr Anil V Salgaocar [2012] EWCA Civ 265