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Can an Exchange of Emails be a “Contract?”
As we have discussed here on this blog occasionally, there are significant legal issues with respect to how contracts are formed. There are many legal requirements for formation and enforceability. For example, there must be adequate consideration — value given and received. As another example, the person agreeing must be properly authorized to legally bind a business or corporation to a contract.
Another situation to consider is whether it is possible for a San Diego business to be bound by contract from an exchange of emails. The quick answer is, “yes.” Here is a look at the legal issues.
San Diego Corporate Law: Is a Formal Document or a Signature Needed?
One of the reasons that people think emails cannot create a contract is that there is never a “formal document” and there is never a pen-and-ink “signature.” However, a valid contract does not require any formal document and no formal “signature” is required, either. Under California law, a contract can be formed by oral statements and by course of conduct. In both of those circumstances, no “document” exists and no “signature” is made or required.
Furthermore, with respect to emails, there may be a “signature.” Under the California Uniform Commercial Code, for example, a signature is “… any symbol executed or adopted by a party with present intention to authenticate a writing.” See Cal.U.Com.Code, § 1201, subd. (38). In this respect, your name and company-identifying formation at the bottom of an email might be a “signature.” Legally speaking, the key idea is whether a party took any actions that would show agreement/acceptance. Likewise, beginning performance is another way of expressing agreement with the terms that might be set out in various emails. As noted, no formal document is needed. As long as various emails taken together meet the legal requirements, then the courts will deem a contract to be formed.
San Diego Corporate Law: Basic Requirements for Contract Formation
In general, under California law, for a contract to be legally binding, there must be
- Offer
- Acceptance
- Consideration and
- A meeting of the minds as to the essential terms of the contract
See discussion here. As long as the combined emails demonstrate the foregoing four elements, then, yes, a contract has been formed via email. Remember that under the Uniform Commercial Code, courts will enforce contracts partially. So, even though the emails are incomplete, a contract might have been formed with respect to part of the contemplated transaction.
San Diego Corporate Law: Tips for Avoiding Inadvertent Contract Formation Via Emails
When exchanging emails, the key to avoiding inadvertently forming a contract is being clear in what you are writing. Take your time and write out your position. Do not type a quick email that just says “Okay.” That might be deemed an “acceptance.” Here are few suggestions:
- As noted, take your time and write only after careful consideration — no quick emails; have others review the email before hitting “send” if there are doubts
- Use disclaimers like “FOR DISCUSSION ONLY” or type the word “DRAFT” at the top of the email
- Indicate where appropriate that others must review and agree to what is being discussed
- Add language to your signature block saying something like “This signature block is not sufficient for purposes of formation of a legally binding contract.”
- Add language disclaiming use of emails for making offers and/or indicating acceptance
Most importantly, consult a good San Diego corporate attorney who can handle the negotiations properly without risk of accidentally agreeing to something to which your company does not wish to be bound.
Contact San Diego Corporate Law
As can be seen, legal issues with respect to contract formation are complex. Every business needs experienced business attorneys to provide legal advice concerning business contracts. If you need help, contact attorney Michael Leonard of San Diego Corporate Law. To schedule a consultation, email us or call at (858) 483-9200.
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