Think That Email Isn’t a Contract? Think Again

You’ve got mail!

And, as two recent court decisions indicate, you might also have a binding contract. The rulings stand as important reminders to everyone who thinks that email communications are different because “it’s just email.”

The first case involves an agreement to purchase repossessed medical equipment between a bank and a hospital. In a series of emails, the hospital made an offer to buy the equipment, which the bank accepted. When the hospital ended up not making the purchase, the bank sued for breach of contract. From law firm BuckleySandler:

“… the U.S. Court of Appeals for the Tenth Circuit held that a series of emails taken as a whole provided sufficient evidence that the parties intended to form a contract… The court applied the Uniform Commercial Code to uphold the district court’s ruling that a contract had been formed and breached. The UCC standard relies on ‘objective, observable manifestations of intent to contract.’ Evidence of intent requires a signed writing that need only contain the essential terms of the agreement. In this case, an email from the hospital offering to purchase the items and an email from the bank accepting that offer, combined with multiple, subsequent references to a binding agreement by the bank that the hospital did not refute, as a whole, provided sufficient evidence of a contract.” (Tenth Circuit Finds Emails Provide Sufficient Evidence of a Contract)

In the second ruling, two family members were disputing ownership of a parcel of land. From Miller Canfield:

“Just prior to trial, the parties met in an attempt to settle the dispute and their respective attorneys exchanged emails. Appellee’s counsel’s message set forth proposed settlement terms including the transfer of the land. Appellant’s counsel replied with the phrase ‘that is the agreement’ and typed his name at the bottom of the message. The trial court found that the email exchange constituted a binding agreement with the attorney’s ‘signature’ at the bottom of the email message rendering it a ‘signed memorandum’ to satisfy Tennessee’s statute of frauds requirements for a conveyance of real property. The Tennessee Supreme Court affirmed the trial court’s ruling.” (Courts Find Email Communications Result in Binding Contracts)

The takeaway?

Courts are increasingly considering email as formal communication that could impose binding obligations on the authors. Law firm Sands Anderson:

“A binding written contract can be formed by exchange of emails, even where the parties don’t both print and physically sign a document. Contracts do not need to contain much ‘magic language’ to be valid, but they do need to name the parties, be signed by both parties, and the price needs to be stated or determinable. If certain terms are missing, often the Uniform Commercial Code can fill the gaps, such as delivery or shipping terms, risk of loss, warranty. In addition, both sides need to give ‘consideration,’ which is the exchange of something of value. Usually one party promises to provide a good or service, and the other side promises to pay for it. Sometimes one party offers not to do something (called forbearance), and the other party promises to pay, such as where one party agrees to settle a claim.” (The Importance of Getting it in Writing)

AKA: Think twice before you hit “send.”

Read the updates:

Find additional Commercial Law & Contracts updates on JD Supra>>