The Unappreciated Power of Modern Technology…?

One day you will be able to walk into your local supermarket and buy a property ‘off the shelf’ without using a solicitor.  Hurrah you might say?! 

We are not quite there yet. Right now we (lawyers as well as non-lawyers) need to be aware of the real power of technology and our keyboards – especially when it comes to property matters.     

No doubt to the detriment of older generations, the year 2020 turbo-charged the legal and other sectors into further embracing modern technology and AI is apparently becoming more prevalent.   Even now some solicitors still insist on writing and posting letters to other solicitors (perhaps as a stalling tactic?) and some even refuse to deal with digital signature platforms like DocuSign, despite such services offering clients and practitioners huge advantages including (hopefully for the clients involved!) reduced costs, greater convenience, a reduced carbon footprint, greater speed, and above all legal validity.

However, such amazing technological advances have created certain risks…

…the 2019 Neocleous[1] case involved two firms of solicitors negotiating a dispute with one another.  Nothing particularly amazing – just one solicitor emailing the other, setting out core proposed terms including the terms of the transfer of a piece of land.  The email invited confirmation from the opponent’s solicitor that those terms were agreed.  The opponent’s solicitor replied and confirmed that the terms were agreed.  The emails were not marked “subject to contract”.  The offering solicitor’s client subsequently changed their mind and the opponent’s solicitor litigated on the basis of there being a binding agreement due to the email correspondence. The court agreed that a valid contract existed and that the email footer of a party’s solicitor (which was auto generated) amounted to a signature for these purposes – noting the Law Commission’s recently-published view that ‘data in electronic form can serve as a method of authentication’ (i.e. this does not need to be via a specially designed signature platform) and that a typed name at the end of an email is sufficient, as is clicking an “I accept” button on a website.….. 

… a December 2022 case (Hudson[2]) saw a gentleman splitting from his partner emailing her to say: “I want none of the proceeds of [Picnic House]… Take it.”  and he also wrote: “Under this arrangement, I’ve no interest whatsoever in the house…”.  He later changed his mind and sought 50% of the value of the house referred to. The Court of Appeal disagreed and found that his emails which were signed off with “Lee” typed underneath had amounted to a disposal of his equitable interest in the property….

… a more recent measure of how easy it is to contract on property matters is the 2023 Pretoria[3] case.  This case found that heads of terms which had been signed by a landlord and tenant but not marked “subject to contract” were NOT binding.  However the reasons for this particular decision were interesting and relevant because they were based around legal technicalities.  The court relied upon the fact that there had been an initial exclusivity period – i.e. why would there be one if the parties had intended there to be no further binding agreement.  They also said that because the intended lease in the matter was going to be ‘contracted out’ of the Landlord and Tenant Act 1954, there would have to be a further agreement / document to deal with this matter otherwise to bind the parties without the contracting out process being followed would frustrate the original agreement between the parties.   Interestingly the Court of Appeal said that it is far more straightforward to infer a contract for the sale of land (i.e. freehold or long leasehold) rather than for an agreement for lease because there are more terms to be inferred into a new leasing transaction.  So this suggests that it would be easier to infer a sale when the stakes could be potentially higher than a letting transaction..

Where does this leave us?

Somewhere that we (lawyers and clients) need to be especially careful before pressing “Send”. 

Selling land still requires that a landlord and tenant – or a buyer and seller – need to have formed a valid contract in writing incorporating all of the agreed terms and which is signed by or on behalf of the parties to it.  Contract law requires four key elements – offer, acceptance, consideration and intention to create legal relations.  Emails can confirm these things and typing your name (or your solicitor typing their name or just having an automated signature on their emails) can be sufficient for entering into contracts in property matters.

Gone are the days of those beautiful handwritten deeds on parchment with ornate calligraphy…  

Gone (save for the odd case) are the days of waiting for the all-important morning legal postage delivery which could dictate how the rest of a solicitor’s day might look… 

We are now in the time of instantaneous communications and binding agreements and we need to balance the needs of convenience and commerciality with the requirement to be extremely careful in our communications and activities including marking heads of terms and related discussions ‘subject to contract’ !   I am pleased to report that having double-checked our firm’s email footnotes that we automatically confirm in each email that we are sending communications ‘subject to contract’ and it is worth you checking this too – unless you are with gunnercooke of course!  It is also recommended to still put the term in the subject line of discussions and within certain documents because we can not fully rely upon our respective IT departments because we are all (for now) human and we do all make mistakes, we just need to do all that we can to minimise those mistakes.

[1] Neocleous v Rees [2019] EWHC 2462 (Ch)

[2] Hudson v Hathway [2022] EWCA Civ 1648

[3] Pretoria Energy Company (Chittering) Ltd v Blankney Estates Ltd [2023] EWCA Civ 482