19 May Email Changing Landscape of Binding Contracts
With information traveling at the speed of light with the power of the internet, doing business over email or Skype is a quick, informal and cost-effective means of communication for negotiating parties.
However, as technology becomes more ingrained in everyday life, rules and regulations in business are changing right along with it and it is important for any keen observer to take note of these changes.
One of the biggest ways that technology has affected real estate transactions is that email is now a form of a binding contract. In 1999, the Uniform Electronic Transactions Act was passed by the federal government and has since been adopted by more than 47 states, including California.
The law states that electronic records can constitute legally binding agreements or contracts and are not required to be in writing. It also stipulates that the mere appearance of a name in an email signature block or even in the “from” field of the email can technically be considered a valid electronic signature.
This means that through the UETA and other electronic transaction laws that have been adopted at the state level, communication with real estate agents and clients through email can lead, sometimes inadvertently, to entrance into a legally binding agreement. As a result, seasoned business professionals urge all clients and agents to adhere to a few guidelines when communicating via email.
The first is to add a clause into your email signature that explicitly states that terms are not subject to acceptance until a written contract is signed by both parties. The second is to simply watch what is said in emails. With easy access to email enabled by smartphones and tablets, it’s important to take care in responses to emails. Even a quick “that’s fine” response can inadvertently state an agreement.
How Email as Binding Contracts has Played Out in Court
Although it seems a simple enough situation to avoid, this stipulation has reared its head in the court of law lately and yielded some interesting rulings.
In the 2012 case of Feldberg, et al. v. Coxall, a Massachusetts judge officially set the bar for examination of email as a binding agreement. The case regarded a real estate deal between a buyer and a seller who had been negotiating terms over email. After a series of emails were exchanged, one final message was sent attached with a revised, but unsigned offer to purchase.
At the last minute, the seller pulled out of the deal prompting the buyer to sue on the grounds that the deal had indeed been sealed in the last email exchange. The seller countered that nothing had been signed and made motion to have the case thrown out all together. In a surprising and bold move, the judge denied the seller’s motion to dismiss thus opening the door for courts to look at emails as binding agreements.
Although the case was eventually settled out of court, the judge set an important precedent in the evolution of email and binding contract laws that all business professionals should take heed of.