Around the water cooler: Contracts in email

Each week I will highlight a different case or legal happening, and solicit your thoughts on the impact of it in the legal community.

Several lawyers at Wildman Harrold want to warn the public that a contract doesn’t have to include a piece of paper and a pen. A contract can be made through e-mail.

“In the real estate world, relationships are driven by a contract,” said partner Tom Matyas, whose practice is focused on real estate litigation. “In this electronic age, real estate people are constantly communicating, and, maybe they don’t know it, and many don’t know, that by hitting the send button they could be forming a contract.

“What we have in the real estate world is this false sense of security that until you pick up a pen and you sign a many-page document there is nothing binding between anybody.”

Many people view e-mail as a casual way of communicating with another person, said partner Tom Smedinghoff, whose practice focused on the new legal issues relating to the developing field of information law and electronic business activities.

But several recent court cases found e-mail exchanges to be binding contracts. In some cases, Smedinghoff said, the courts looked at a series of e-mails and made a judgment based on the e-mails as a group. All the relevant key terms and signatures are present to make it a contract.

He said this is a U.S. legal issue, something that affects not only Illinois residents. The lawyers pinpointed several cases that act as examples of e-mails being treated as contracts. 

Shattuck v. Klotzbach, 14 Mass.L.Rptr. 360 (Dec. 11, 2001). In Shattuck v. Klotzbach, the Superior Court of Massachusetts held that an e-mail satisfied the written signature requirement necessary to form a valid real estate purchase and sale agreement. The Shattuck case involved the exchange of a series of e-mails regarding the sale of residential property.

Rosenfeld v. Zerneck, 4 Misc.3d 193, 776 N.Y.S.2d 458 (May 4, 2004). In Rosenfeld v. Zerneck, the Supreme Court, Kings County, New York, held that typing the name at the end of an e-mail satisfied the Statute of Frauds writing requirement. The court concluded, however, that there was no meeting of the minds as to the terms of the agreement for the sale of the property. The Rosenfeld case also involved an exchange of e-mails for the purchase and sale of residential property.

Stevens v. Publicis, S.A., 2008 NY Slip Op 02880 N.Y. App., (April 1, 2008). “In denying plaintiff’s motion for partial summary judgment prior to trial, the court found that the parties had agreed in writing to modify plaintiff’s duties under the employment agreement. In so ruling, the court properly relied on the e-mail exchange between the parties in which both sides expressed their unqualified acceptance of the modification to the agreement.”

Smedinghoff said they aren’t recommending that people not communicate with this technology. Instead they recommend finding an appropriate way to use the technology.

Some people include disclaimers in their e-mail that the emails do not mean the parties are entering into a binding contract, they said.

“I think we have to exercise some discretion and we have to exercise some patience,” Matyas said. “When we are sending these e-mails they can be the same as a beautiful 100-page document. You know how much care we put into a 60-page or 100-page document, yet it’s rare that an e-mail gets the same amount of attention, the same kind of review. Yet, they may be of the same legal force.”