A guarantee can be created by an exchange of emails

Golden Ocean Group Ltd v Salgaocar Mining Industires PVT Ltd [2012]

Under section 4 of the Statute of Frauds 1677 a guarantee must be in writing and signed by the guarantor or a person authorised by the guarantor in order to be binding.

A recent Court of Appeal decision has provided that an exchange of emails between two parties, without any formal document being signed, can satisfy the requirements of section 4 of the Statute of Frauds.

In Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd and Another [2012] EWCA Civ 265, negotiations as to the terms of a guarantee were conducted via email over a four-week period, however no final form guarantee document was signed by either party. The High Court and the Court of Appeal held that despite there being no signed agreement, the sequence of the email negotiations between the parties could be put together to form a complete agreement which constituted a guarantee and complied with the Statute of Frauds, in that it was in writing and signed by the guarantor.

The requirement for a guarantee to be in writing

That there was no formal document signed by either party did not prevent the guarantee from being valid and enforceable, as Section 4 of the Statue of Frauds 1677 does not require an “agreement in writing” to be one single document or even a small number of documents.

The requirement for a guarantee to be signed by or on behalf of the guarantor

Although no document was physically signed by the guarantor in the Golden Ocean case, it was held that it had been validly signed as a result of the email signatures used by the parties. The Court of Appeal stated that provided parties demonstrate an intention to be bound by the terms agreed, a person putting their name on an e-mail to indicate that it comes with their authority and that they take responsibility for it contents constitutes a signature for the purposes of section 4 of the Statue of Frauds 1677.

It is therefore possible to enter into a valid and enforceable guarantee via a series of negotiating e-mails which use an email signature, provided the parties demonstrate an intention to be bound by the agreement.

In order to avoid inadvertently entering into a guarantee in the course of the negotiation of its terms through an exchange of emails, all such emails should be clearly marked “subject to contract” and should state that entry into a binding guarantee will only come into effect when a final formal document is signed by the parties.

Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.

For further information, please contact Paul Gilks at or Peter Francis at