Written commercial agreements are critical to the operation of businesses and are designed to give clarity and certainty to the parties regarding their rights and obligations in connection with the same. As such, ordinarily agreements of this nature contain a standard clause that any variation to the agreement must be in writing and signed by or on behalf of both parties. The intention being that should the parties wish to digress from what they have originally agreed then this should be expressly agreed upon.
However, it has recently been questioned whether an email exchange would be sufficient to vary an agreement and satisfy the requirements of the above mentioned standard clause. In C & S Associates UK Ltd v Enterprise Insurance Company plc the Commercial Court ruled that it was and that it did.
In this case an exchange of emails was deemed to satisfy the requirement that the variation was in writing and duly signed by the parties. In reaching his decision the judge espoused the following rationale:
- in the absence of any reference or requirement for a paper document in the standard clause, an email exchange would satisfy the condition for a variation to be in writing;
- the automatically generated email signatures were sufficient for the content of the email to be deemed to be signed by the parties as there was no express requirement for manuscript signatures in the standard clause;
- following the email exchange the parties operated in accordance with the proposed varied terms without objection indicating that they had agreed or acquiesced to the new terms which had been incorporated into the contract; and
- the language used in the email exchange did not contain anything which would suggest that the parties did not intend to be bound and moreover strongly suggested that the amendment had been agreed indicating that the parties did objectively intend to be bound.
In coming to his conclusion the judge referred to the reasoning set out in Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd in which the Court of Appeal held that a sequence of negotiating emails in which terms to vary a guarantee were agreed were capable of satisfying the formality provided by the Statute of Frauds Act 1677 that such variation must be in writing and signed by or on behalf of the parties.
Therefore when negotiating a variation to an agreement, care must be taken when drafting email correspondence as provided that the other formalities required for a binding variation are in place (such as offer and acceptance, an intention to be bound and consideration) email correspondence may very well be sufficient to meet a requirement for the variation to be in writing and email signatures will satisfy the requirement for such variations to be signed by or on behalf of the parties.