Can an email chain amount to a guarantee?

Barry Riley

Golden Ocean Group Limited -v- Salgaocar Mining Industries PVT Limited and Another 2011

In what can only be classed as a victory for the digital age, when placed up against a statute dating back to 1677, this case considered whether a chain of e-mails was sufficient to constitute a guarantee.

Broadly speaking, under the Statute of Frauds 1677 (Section 4), a valid guarantee must be an agreement, memorandum or note which is in writing and signed.

Taking a more commercial and 21st century approach, Clarke J reasoned that it made good commercial sense to look at all documents (including e-mails) which may, in effect, constitute a guarantee.

Indicative of the way forward, it is surely a step in the right direction for modern commercial practice.

However, it is not yet a definitive answer to the question, as it was held that, in this instance, it was only arguable that there was a guarantee in place. What it is though is a clear warning shot to those entering into negotiations by e-mail, where guarantees can be created without a signed document at the end of it. With significant change on the horizon, it is easy to see how this is likely to become more of an issue, the more we deal with electronic communications as a preferred negotiation tool. It is a mere warning shot at this stage, but it could well become the norm in years to come.

In short – as always, approach e-mail communication with great caution!

Barry Riley
DDI – 0117 9453 042


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