Is an email contract binding? — New York Business Law

Is an Email Contract Binding?

by Fred Abramson on October 15, 2012 · 8 comments

We all use email. Perhaps due to its ubiquity, we often feel safe sending business messages via e-mail. The Atlantic recently noted that most sharing is accomplished through Dark Social means that are difficult to measure because they are “private.” But don’t be fooled, communicating through email can have dire consequences.

As a business lawyer, the two most frequent questions regarding emails are the following:

  1. Am I  contractually bound  by what is written in an e-mail?
  2. Can I rely on an exchange of e-mails as evidence of a contract?

It has become increasingly clear as courts are relying on electronic transaction legislation, applying rules of contract formation, and finding that e-mails create binding contracts. As a result, you need to be aware of what you state in e-mails to avoid an accidental contract.

The Legal Framework 
  • Laws passed more than a decade ago by both New York State and Congress provide that contracts will not be denied legal effect solely because they are created or stored electronically. Paper contracts are not a requirement.
  • Courts then look to basic contract formation law to find out whether a number of e-mails creates a binding contract. In doing so, courts look to see if one party made an offer, whether that offer was accepted by the other party, and whether there was intent to be bound by the e-mailing parties, which the courts call a “meeting of the minds.” If a court finds that those elements are present within a series of e-mails and concludes that the terms of the agreement are reasonably certain, the court is likely to hold that the e-mail exchange is a binding contract.

I recently litigated a case where a series of e-mails constituted a change to a sales agreement even though the agreement included a section requiring all changes to be in writing and signed by the parties. The court decided that the series of e-mails exchanged between the parties constituted the requirement that the changes be in writing, and by both parties typing their names at the bottom of their respective e-mails, the changes was signed by both parties as required under the contract.

Be aware that simply because e-mails can satisfy the requirement under the statute of frauds that all contracts over $500 must be in writing, other contract formation rules must be applied. For example, if there is no evidence of a “meeting of the minds,” then there may not be a contract.

What to keep in mind before you hit send
  • Think about whether the series of e-mails contains the necessary contract formation rules. Was there an offer? Did someone accept the offer? Was there any money exchanged?
  • If you do not intend to be bound, use qualifying language in your e-mails, such as this is not a binding contract.

It is vital to be aware that e-mail can create or change an agreement.

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  • Gordon Locke

    Fred is correct.  In point of reference, in my solo practice I provide representation in substantial commercial collection collection matters throughout the country.  I virtually always use e-mail for my retainer agreements, and have never had a problem with collecting my fees in these matters. 
    In fact, the only problem that I ever had in this regard was collecting my fee in connection with representation that I provided in a couple of acquisitions.  Of course, the exception proving the rule, in this instance, I had manually executed retainer agreements for each of the acquisitions that I had completed, again with my services, having again been provided on a contingent fee basis,
    Gordon Locke

  • Tatiana Arriagada

    Very interesting article, Fred. In Chile, the civil and commercial law recognize that there is a contract when the minds met. Therefore, contract are considered to be formed even by the simple verbal consent. However, the proof of contracts that involve the delivery of things of a value over about USD$40 must be in writing. Therefore, e-mail can be considered sufficient proof of the existence of a contract. 
    However, there are some contracts that have an additional requirement to be valid, and where the simple agreement of the parties, verbal or written, is no enough. For example, the sale of real estates, or mortgages on real estates, which need to be in writing and sealed by a notary public. In cases such these, e-mail would never be considered as an amendment of those contracts.

  • Scott Hunger

    I find it difficult to understand why anyone would think an email contract is not binding.  As long  as the 3 legal requirements for the existence of a valid contract are present: an offer which is accepted supported by consideration…one must always rely on a legally binding contract being present…no matter what the substantive form may be.

  • Jorge Mafud [Mx Lawyer]

    Thanks for your insights Fred.

    A discussion we’ve had several times in the company where I work (a Mexican company with operations in Mexico, the USA and several other countries) is if by a supplier would be bound by the terms and conditions attached to an email (a PDF or word document).  

    To a certain point, I understand that the body of the email could be binding but, the attachments?  How can you prove that a certain PDF document with a certain text was attached to the email in question?

    I’d very much appreciate your thoughts on this.  Regards from Monterrey, Mexico.

  • Jack Levey

    Fred,  for deals that do not involve New York law, the Uniform Electronic Transactions Act leads to a similar result. UETA extends to voice mail messages as well as email.
    Jack Levey,
    Plunkett Cooney, Columbus Ohio

  • Guest547

    I second Scott Hunger’s response.  Can’t even believe this is a blog topic.  A contract is a contract. 

  • Chris T

    Thank you for posting, this is very useful. I have been trying to research written contracts signed by all parties, and whether they are legally binding in New York. Does there need to be a witness or a notary for it to be valid? Could you provide some insight on this? I appreciate it.

  • john

    Thanks for the info. Does anyone know where I can find a blank sales agreement form to fill out?

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