1. The Nature of Contracts
2. Emails and Contract Law
3. Email Contract Safety Tips

Updated July 6, 2020:

Is an email legally binding? This is a question of concern to many who frequently deal with contracts or imagine that they soon will be, and the answer to this question is yes, emails will generally be considered by courts to be legally binding, and although there may be some exceptions, to play it safe, one should always assume that a contract will be legally binding.

The Nature of Contracts

Contracts, in some form or another, have been around for the length of human history, and email is just one of the newest means of communication through which a contract can potentially be made. However, since email is so new, some might not think of it as a means of contract finalization, which can lead to difficult situations where a contract is made inadvertently.

Most people think of contracts as being formal agreements put into writing and signed by the parties concerned, often with lawyers present, but the fact of the matter is that a contract is merely an agreement between multiple parties concerning an exchange of items of value, and the physical form of the contract is not so important.

Therefore, in theory, a contract could be written upon a napkin just as well as watermarked paper, so long as the terms were stated clearly and agreed to, and oral or verbal contracts are not unheard of (though difficult to enforce and frowned upon by many).

One of the common misconceptions concerning contracts is that a signature is required for a contract to be binding, while actually, all that is required is for both parties to agree upon the terms set out.

Thus, there is a theoretical basis for the notion that an agreement to terms in an email, formally stated or not, could constitute a legally binding agreement, and this theoretical basis has been born out in the real world through the law.

Emails and Contract Law

It has generally been accepted in law circles that legally binding contracts may be established through email. Two major pieces of legislation, the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act, have stated that electronic communications can constitute legally binding contracts, and the 2013 case of Forcelli v. Gelco put the principles guiding such laws into practice.

In Forcelli v. Gelco, a representative of the Gelco Corporation’s insurance company offered the plaintiff $230,000 to settle the case, first orally and then reiterated in an email. The plaintiff agreed, but when Gelco tried to back out of the payment after winning the case a few days later, the New York Appellate Division ruled in a separate case that the email constituted a legally binding contract and that Gelco was required to pay the full amount on offer. The court’s ruling was based upon the following factors:

  • Email is now a widespread form of communication.
  • Concluding that an email cannot conform to New York law because it cannot be physically signed is unreasonable.
  • It is possible to give purposeful agreement to contract terms, thereby “signing” it, in an email.
  • Such a purposeful agreement would be consistent with the intent and reasoning of New York’s Electronic Signatures and Records Act.

Email Contract Safety Tips

Since the validity of email contracts is generally accepted under the law, it is important to exercise caution when doing business through email. To that end, the following tips may be helpful:

  • A contract need not be physically signed to be agreed to.
  • A contract may be created over a series of emails, not just one.
  • In some instances, a preliminary email may constitute a binding contract regardless of it referencing a future formal agreement that has yet to be agreed to.
  • Beware of creating an “implied-in-fact” contract, which may occur through industry custom and your conduct.
  • Beware of using certain terms unless you intend their meaning. “Accept,” “agreement,” and “agree” can all be viewed as binding acceptance of a contract in a court of law. The terms “preliminary negations” and “non-binding proposal” would be better substitutes if an actual contract is not intended.
  • If certain conditions are desired before entering into a contract, state them clearly. Do not create the impression of a meeting of the minds if that is not the intent.

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