Contribution page with a Profile that includes a Group(s) field is unable to send email when 'Donate on behalf of an organization' is enabled and used

http://forum.civicrm.org/index.php/topic,12538.0.
Verified on http://drupal.demo.civicrm.org.
The error message varies slightly depending on the mailing method, sendmail or smtp, but both throw the same basic error. When using sendmail:

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An error occurred when CiviCRM attempted to send an email (via SMTP). If you received this error after submitting on online contribution or event registration - the transaction was completed, but we were unable to send the email receipt.

The mail library returned the following error message:
Validation failed for: John Doe

This is probably related to a problem in your Outbound Email Settings (Administer CiviCRM » Global Settings » Outbound Email), OR the FROM email address specifically configured for your contribution page or event. Possible causes are:

Your Sendmail path is incorrect.
Your Sendmail argument is incorrect.
The FROM Email Address configured for this feature may not be a valid sender based on your email service provider rules.
Check this page for more information.
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This is my first issue, I'm assuming this is 'Major', please correct me if I'm wrong. Confirmed with 3.1.3.