Millions of emails fly around the world every day between parties stating what each person wants and will do. However, can something written in an email be taken to be a legally binding contract? The answer: it depends.
A contract is defined as an agreement between two or more parties where there is an exchange of goods or services and consideration. The agreement means that both parties agree to the deal and consideration is generally money in return for an item or an action. If the email meets these basic requirements, it is a contract. Similarly, you could write the terms of a deal on the back of a napkin and, as long as both parties are in agreement, it is a contract. Signatures are not required, though that is often a way one party acknowledges their assent to be bound.
A Meeting of the Minds
The first question, of course, will be whether both sides intended the email exchange to form a contract and whether they both agreed to all terms, whatever those might be, laid out in the email. If one email says that they will perform a certain service for a certain fee and the response is an agreement, then there might be a contract. Of course, in a business sense, the people emailing do need authority to bind the company.
An email can be a contract under both statute and by case law. The Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act clarify that electronic communications, such as email, can create legally binding contracts. As can messages on various social media platforms and other types of communications between parties. Email is so prevalent, especially in business communications, and people generally rely on the information contained in emails to make decisions. It is certainly possible to outline all the terms necessary in an email and indicate mutual agreement.
Because courts have held that emails can constitute binding contracts, businesses often find themselves faced with agreements or terms that are not what they want. It’s important to educate anyone in your organization that will be managing email not to agree to something that they do not have the authority to agree to or to note in the email that their agreement does not create a contract.
Similarly, getting a phone conversation documented in an email can be a great way to provide evidence of verbal contracts, especially when the other party emails back agreeing to what is outlined in the email. If your company is having problems with email contracts or facing a lawsuit, reach out to the experienced team of litigators at the Dunn Law Firm. We understand business litigation and contract law and can help you understand your case and the best way to move forward. To learn more, reach out to the Dunn Law Firm by calling (435) 628-5405 and set up a free consultation today.