Contracts by Email: Writer Beware

Important business transactions are regularly decided and agreed upon via email these days.   Email is instantaneous, easy, (mostly) secure, and with the proliferation of smart phones, allows big decisions to be made as quickly as one can type on her Blackberry.  Despite the obvious advantages of  email in business, there is a very real danger of inadvertently binding oneself to a contract through informal email exchanges.  If an email or chain of emails contains an offer of a deal by one party, and the other party responds by email accepting the deal, then there’s a good chance that a contract has been formed, despite the fact that no signatures are exchanged (and even if one party had no intention of entering into a contract in the first place).

A Cautionary Tale from New York

A court in New York recently recognized that a series of emails exchanged between two parties constituted a valid modification to one party’s existing employment agreement.  Stevens v. Publicis, S.A., et al., 50 A.D. 3d. 253, 854 N.Y.S. 2d 690 (N.Y.A.D. 1 Dept. 2008).  Specifically, one of the emails exchanged between the parties included a detailed proposal of employment duties, and it was followed by an email from the other party accepting the proposal.  Stevens, 50 A.D. 3d 253.   The court found that the parties had agreed “in writing” to modify one of the parties’ duties under the employment agreement, and the emails were “signed writings” because they included the parties’ names and signature blocks at the end of their emails.  The court reasoned that the parties’ names signified an intent to authenticate the contents and satisfied the requirement of the employment agreement that any modification be signed by all parties.

Another Case In Massachusetts

In another case, the court  bound two parties to settlement terms that were exchanged via email by the parties’ respective attorneys.  The first email, written by one party’s attorney, summarized the settlement terms.  This email was followed by a one-word reply from the opposing attorney stating  that the terms were “correct.” Here, the court ruled that the emails constituted a sufficiently complete and unambiguous statement as to the terms of the settlement agreement, and that both parties intended to be bound by that communication of settlement terms.  Basis Technology Corp. v. Amazon.com Inc., 71 Mass App. Ct. 29, 878 N.E.2d 952 (Mass. App. Ct. 2008).

Takeaway

As these two cases demonstrate, although email may be an informal means of communication, the substance of emails is subject to the same level of scrutiny as signed writings.  As such, it is very important to be particularly cautious when discussing a possible business deal in an email.  At bottom, if all you intend is to negotiate issues leading up to a formal written and signed contract, make sure you clearly state that in your emails.

If you have any questions regarding the formation or enforcement of contracts, please call one of our experienced attorneys at Acumen Law Group.

Authored by Dominika Szreder Fard, Esq. and Shoko Asaka, Law Clerk