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Contract formation through an informal email exchange?

By Blair Rosenthal

A client recently asked whether an email exchange could form a binding contract between two parties. The answer is an unequivocal ?yes,? it certainly could.

Remember?even contracts that have no written component whatsoever are still generally enforceable (though they may be difficult to prove), as long as they do not fit within the statute of frauds. The statute of frauds varies from state to state but generally requires a written contract signed by the party against whom it is being enforced if the contract covers any of the following:

  • Contracts that by their terms will not be performed within a year
  • Contracts relating to a promise to answer for the debt, default, or miscarriage of another person
  • Contracts ?upon consideration of marriage, except mutual promises to marry?
  • Contracts for leasing real estate for a period longer than one year or for the sale of any real estate or any interest in real estate
  • Contracts for the sale of goods worth more than $500
  • Equipment leases with payments totaling more than $1,000

See, e.g., Colo. Rev. Stat. ?? 38-10-112, 38-10-108, 4-2-201, 4-2.5-201.

Numerous courts have found that an email exchange could satisfy the statute of frauds and, therefore, form a binding contract as long as the emails taken together show an agreement on the essential terms of the deal. See, e.g., Westlake Petrochemicals, L.L.C. v. United Polychem, Inc. (5th. Cir. 2012); Hermosilla v. Coca-Cola Co. (11th Cir. 2012); Blackward Props. LLC v. Bank of America (6th Cir. 2012).

SMART TIP: Be careful what you put in an email, text message, or any sort of ?writing?? whether it is words on printed paper or electronic text. If you are not ready to be bound, you should condition any response to make it clear that: 1) You are not agreeing, 2) You would need additional authority before you can agree, or 3) An agreement will only be formed after all of the relevant terms are set forth along with additional contractual terms in a formal, written agreement, which is manually signed by both parties.