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Can Emails and Texts Constitute a Legally Binding Agreement?

Smartphone texts and emails

Almost everyone who conducts business understands the necessity of having a contract—a legal document stating the expectations of both parties and how negative situations will be resolved. In addition to ensuring that all parties are on the same page (literally), everyone knows contracts also are legally enforceable in a court of law. What many people don’t know, however, is that courts have ruled email and even text-message exchanges can in some cases constitute a binding contract.

Here’s how it works: A basic binding contract must comprise four key elements: an offer, acceptance of offer, consideration, and the intention by both parties to create legal relations. If an email or text message exchange between two parties can be shown to include all four of these elements, a court might very well rule that a binding legal contract was established.

A common misconception among many businesspeople and consumers is that unless a document was signed by both parties, there is no way they can be bound to an agreement in an email or text message. Indeed, consumers and businesses are often quite surprised—or perhaps alarmed—to learn that seemingly casual conversations that contain relevant language can be sufficient enough to create a legally binding contract or a guarantee.

Exemplified by multiple recent cases across the U.S., an enforceable guarantee can be created by a series of emails authenticated by the online signature of the guarantor. That’s right: If your work or personal emails contain a unique email signature, this signature can carry the same legal weight as your actual pen-and-ink signature.

For example, if two parties exchange a series of emails where they agree to amendments to a standard-form document including formally negotiated terms by which the parties intend to be bound, if a person puts their name on an email signifying responsibility for its contents, it will likely be deemed a signature even if the language used in the exchanges is far from formal legalese or there was never a full and complete agreement incorporating all of the key terms executed.

For this reason, it’s important for all to remember that if you do not want to create an enforceable agreement or guarantee while negotiating in writing via text or email, make it clear that you are negotiating ‘subject to contract’ and do not intend to be bound until a formal document is executed. Stibbs & Co. recommends adding a disclaimer to your email signature that makes it clear you don’t intend to be bound until a formal agreement is executed.

If you’re not sure whether or not your emails or texts are binding or simply want to make sure that you won’t be bound by them in the future,  contact the experienced legal team at Stibbs & Co. today. We’ll provide the counsel you need to ensure that your written communications will never come back to haunt you.