GUEST ARTICLE: The Devil is In the Emails: Your Inbox Could Be Home to Binding Contracts

GUEST ARTICLE: The Devil is In the Emails: Your Inbox Could Be Home to Binding Contracts

Often I am asked if certain arrangements and deals are enforceable without a written contract. Sometimes, I am asked that question with a little bit of layman lawyering as to whether the so called “statute of frauds” (this is an ancient statute that essentially says certain classes of contracts) can cut off a contract claim. First, let me say that the law is blind, but not dumb. If there was a real arrangement oral or otherwise, rarely will a court will simply tell the plaintiff that he/she is without a paddle.

This is due to several major reasons. First, oral contracts are often enforceable. And secondly, even in the absence of a formal contract, increasingly deals are made through email and NY courts have read these emails to form a binding contract (this is because that ancient statute of frauds statute was amended to include electronic communications). Three new NY cases illustrate the courts’ willingness to enforce emails as a contract. Inc. v. Nstein Techs. Corp., the court enforced an e-mail exchange on a licensing agreement as a “signed writing” under the statute of frauds, because sender typed his name at the bottom of a critical e-mail.

In Stevens v. Publicis, S.A., the court concluded an employment agreement was modified by virtue of the sender typing his name at the bottom of a critical email.

In JSO Assocs. Inc. v. Price, the court held that a typed name at the foot of an e-mail was not necessary to enforce a business broker agreement for a party that arranged to secure purchasers for a business.

So be wary of what you agree to in your next reply.

Comments (17):

  1. Really interesting stuff. What I find the most fascinating is the signature is being as the basis of the agreement. Thanks for sharing, thought-provoking post.

    • @Adam, It’s slightly bothersome to me that a signature at the bottom of an email can be sufficient for courts. Most email programs, like Outlook, automatically put a digital signature at the bottom of a page if programmed to do so. I think the holding in JSO Assocs. Inc. v. Price was appropriate because the court did not base its ruling on a signatory line that could have been automatically generated.

      • @Evan Rosenberg, I agree that given the prevalence of automated digital signatures at the bottom of many emails, it is slightly troubling. However, if you are the sender, you are on notice that the digital signature will be included in your email. But if you are the receiver, you can hardly be expected to make a case by case determination regarding whether or not a signature was placed in an email deliberately or automatically.

        In the end, an agreement is an agreement (regardless of whether it is made on paper or via email). The intent of the parties should ultimately control. Given the vast amount of business conducted via informal mediums, it hardly seems fair to allow parties to dodge their responsibilities because of antiquated formalities.

      • @Evan Rosenberg, Bothersome that a signature on the bottom of an email can be sufficient for courts? Holographic wills can be validly “signed” with much less. Also, as Mr. Rosenberg pointed out, digital signatures only “automatically” appear when programmed to do so. Thus programming it to do so evinces an intent to affix one’s signature to that document. I agree with the ruling, however, I understand the counter argument.

  2. umm This is what e-discovery is about so how is this news?

  3. oh, wait. I see. this wasn’t ‘news’.

  4. People like to think their emails are informal or non-binding, yet they use email all the time for the most important things. It’s easy, and that’s why we like it, but beware that it means something. These cases are the perfect example–if you negotiate a contract through email, then the contract is binding because of the email.

  5. The above three decisions are good examples of how technology has impacted the law. I agree with Laura – e-mail has become a popular method of communication, and people should be aware of what they are communicating in such e-mails. With the continuing enhancement of technology, I wonder what the next step is. Through what other technological mediums will contracts be created and enforced by courts?

  6. The previous poster brings up an interesting point. What is the next medium that courts will use to create a contract? My inevitable response to this is text messaging may be the next medium, but perhaps even tweets and posts on Facebook pages…

  7. I completely agree weith this article. As it makes clear, oral contracts are often enforced by courts of law. If you can bind yourself to an agreement through a mere conversation, then I can’t see why you wouldn’t be able to bind yourself via an email that you typed out. I also agree with the author’s statement that the law is blind, but not dumb. The odds are that if there was no agreement made in the emails, the email won’t bind you to anything and that overall, the content and substance of the emails will prevail, just like the content and substance of mere and/or informal conversation has prevailed for many years in courts of law.

  8. Logically, the analysis makes sense as emails provide reliable evidence of the essential contractual terms. That many people treat email as informal exchange is their misperception.

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