Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd [2011] EWHC 5

The Court of Appeal has confirmed a decision of the High Court that a series of documents, such as a chain of emails, with an electronic signature can constitute a valid guarantee.

The Statute of Frauds 1677 requires that for a guarantee to be legally enforceable it must either be made or evidenced in writing and be signed by the guarantor or an authorised person.

A chain of emails had passed between Golden Ocean Group and Trustworth Shipping by which they agreed the charter of a vessel. In the course of the email correspondence reference was made to the deal being “fully guaranteed by” an affiliate of Trustworth, Salgaocar Mining Industries Ltd.

In 2006 the High Court in N.Mehta v J.Pereira Fernandes S.A. [2006] EWHC 813, held that an email “memorandum or note” would suffice for the Statute of Frauds, so long as it demonstrated a clear intention to contract. It suggested that the signature could take the form of a signature page, or even the inclusion of the guarantor’s name in the body of the email with the intention that it constituted a signature.

This decision goes further in that the Court of Appeal was willing to treat a chain of emails, a document made up of various correspondence, as a single binding agreement.

The Court of Appeal found that the “signature” requirement was satisfied by the inclusion of the first name of the Defendant’s broker. Salgaocar argued that this was only a “salutation, and moreover one delivered in a “matey” or familiar fashion”. The Court of Appeal concluded that the broker had added his name to indicate that the email came with his authority and that he took responsibility for its contents. This was sufficient to meet the underlying requirement of the Statute of Frauds, namely to authenticate the contents of the guarantee.

The case is a reminder that surprisingly informal documentation and signatures can create binding guarantees and so caution should be exercised when negotiating their commercial