Can Email Negotiations Create a Binding Deal?
By: JOSEPH G. SPRINGER
Spring 2002
In the recent Massachusetts state court decision of Shattuck v. Klotzbach (December 11, 2001), a seller and buyer were negotiating the purchase of a multi-million dollar home. The seller and buyer exchanged a series of emails that settled on the price and referred to a written purchase agreement that would be prepared. The seller, however, never signed a purchase agreement and later backed out of the deal. The buyer sued, seeking to compel the seller to sell the home pursuant to the terms stated in the emails. The seller sought to have the suit dismissed, arguing that the emails were not signed documents and that there was no binding contract.
The court refused to throw out the case. Massachusetts, like Minnesota and many other states, has a "statute of frauds" that requires any contract for the sale of real estate be in writing and signed by the party to be charged. The judge ruled the emails, taken together, could constitute a legally binding purchase agreement that contained all of the necessary terms of the contract. The judge relied upon the fact that the emails exchanged by the parties ended with the typewritten names of the senders.
This decision was rendered by a Massachusetts trial court upon the seller's motion to dismiss the case. The trial has not yet occurred and any result may be appealed. Even so, the case raises important issues for those who communicate and negotiate by email. Although email is a quick and less formal means of communicating than a signed letter or contract, an email is still a "writing." As the Massachusetts court held, if a writing is specific enough and can be clearly attributed to the sender, it could be held to be binding.
As a result, great care should be exercised when using email. If you are negotiating a deal, add disclaimers stating that the email communication is not binding upon the sender and that the deal is subject to the preparation of a written and signed contract. Finally, make sure that typewritten names within your email state that they are for contact purposes only and are not the "signature" of the sender.