Law in the Marketplace: Can emails be contracts?
Be careful about what you agree to in online communications
Within the past few years, emails and text messages (which I’ll refer to together simply as “emails”) have become the most important tools of business and legal communication. And within the past two years, Zoom meetings and other virtual meetings have become the second most important.
So if you’re a business owner, you have to answer the question whether something you say to a customer, a supplier or another third party in an email or a Zoom call can bind you as if it were set forth in a written contract.
Assume, for example, that your business manufactures widgets and that you’re in a Zoom call with Joe Blow, a key supplier. And imagine that, after a long discussion, you say, “Joe, your offer makes sense” and Joe says, “It’s a deal.” When he says that, is your company bound by a contract with Joe?
The short answer may well be yes, provided that, when Joe’s record is transcribed, the transcription meets three main legal tests:
The first is whether what you’ve said constitutes a valid offer. It will meet this test if you have the authority to represent your businesses and if, taken together, your words and Joe’s in the transcript address and resolve all of the key terms reasonably essential to your deal.
The second is whether Joe has accepted your offer. Maybe when, during your Zoom call, Joe said “it’s a deal,” you thought he meant, “it’s a deal as soon as we resolve a few remaining details potentially important in this deal.” Good luck with that argument. A deal is a deal.
The third test is whether there is “adequacy of consideration.” This means that both sides are getting something from the deal. Again, the transcript will tell whether you and Joe have met this test.
So what’s the bottom line? There are two of them:
• Even emails and Zoom calls can easily bind you to deals you don’t want. Emails and Zoom communications often have a friendly and informal feel. But be careful what you say in them.
• If a deal involves significant stakes for your company, never agree to it in an email or a Zoom call. Put it in writing in a carefully drafted contract.
John Cunningham, a lawyer licensed to practice law in New Hampshire and Massachusetts, is of counsel to the law firm of McLane Middleton. He can be contacted at 603-856-7172, email@example.com or llc199a.com. This article is being shared with partners in The Granite State News Collaborative. For more information visit collaborativenh.org.