Can an Email become a Binding Contract?
While most people consider email to be a form of informal communication, there are times where message exchanges can contain proposed agreements and offers. There is a misconception that just because a document isn’t signed, it’s not a binding contract and neither party can be held to the agreement. However, there may be instances where a casual conversation can be misconstrued and contain enough information that someone might rely on it.
Basics of a Contract
The elements of a contract are pretty straightforward and must contain the same elements to be legal and binding:
- Competency and Capacity
- Intention to Enter into a Contract
- Lawful Subject Matter
- Written (Applicable in Some Instances)
For contracts that involve a service or product over $500 or the term of a contract extends beyond a year, it must be in writing. Part of the written requirement includes the need for a signature. The question is then, does an email meet the qualification under the Statute of Frauds?
The Uniform Electronic Transaction Act (UETA) is valid in almost all states and it notes that if a law requires a record to be in writing, an electronic signature is satisfactory. This means there is a risk a court would determine that your signature block in email qualifies as your binding signature to make a contract.
Tips to Keep Emails from Being Construed as Contracts
If you’re concerned about an email potentially being construed as a contractual agreement, keep some general guidelines in mind when drafting any correspondence:
- If you have no plans to enter into a contract, ensure your email explicitly states that fact.
- Prepare specific language to that effect and include something to the effect that a written agreement would need to be executed separately and that someone with authority from you and/or your business would have to physically sign a contract before you would be legally bound.
- Add a disclaimer to all emails that your electronic signature does not constitute a signature for the purposes of a contract. Or that the sender of the email has no authority nor intention to make a binding contract by email correspondence.
Retaining a Washington D.C. Business Attorney
Retaining a competent Washington DC business attorney can be an invaluable ally in day-to-day business operations. If you have what appears to be a valid business contract and you need assistance enforcing the agreement, or if you have inadvertently exposed your company to a potential binding contract that you had no intention or authority to make, the experienced team at Tobin O’Connor & Ewing can assist. Contact our office today at 202.362.5900 and let one of our attorneys assist with all your business law needs.