Section 4 of the Statute of Frauds 1677 states that a guarantee must be in writing and signed by a person with the requisite authority in order to be enforceable. In Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265, the Court of Appeal considered the application of this section in the situation where the guarantee was contained in a sequence of emails between the parties. Specifically, the terms of a charterparty and associated guarantee were negotiated and settled in a sequence of emails between the Appellants and the Respondent.
When proceedings were brought under the guarantee, it was argued that the sequence of emails did not amount to the required signed, written agreement. It was submitted that the Statute of Frauds required a contractual instrument which the parties had agreed or intended was to contain the whole of their contract of guarantee.
The Court of Appeal held that the Statute contained no such express indication. There is no limit on the number of documents in which the required writing is to be found, and indeed the conclusion of commercial contracts (particularly charterparties) by an exchange of emails is commonplace. There was, therefore, no objection in principle to reference to a sequence of negotiation emails or other documents in order to identify a contract of guarantee. This, however, was subject to the requirement that the guarantee must be signed by a duly authorised person. This requirement is key. In this case, the signature of a broker (who was duly authorised) was contained in one of the emails in question. Whilst the email in itself was not the contract of guarantee, the signature contained in it authenticated the contract contained in both that email and the other documents in the sequence.
The Court of Appeal has clearly taken a commercial view in this case, accepting the reality that agreements are often made by exchange of correspondence. However, such correspondence will be examined closely to ensure it meets all necessary requirements. It is essential that a duly authorised signature is incorporated in such a way that it authenticates the entire sequence of correspondence, and not just the message in which it appears.
