By Ed Moltzen, Contributing Writer, LIBN
Watch your words: How casual emails and texts can become binding contracts
Long Island attorneys caution that casual emails and text messages can be legally binding contracts if they contain essential terms and show mutual assent. Courts consider the totality of communications and conduct, including electronic signatures and actions taken, making it critical for businesses to clearly define when negotiations become commitments.
From emails to text messages to exchanges between autonomous AI agents, casual business discussions can end up in court, where a judge may rule them a legally binding contract.
The concept that all you need for a contract is an offer, an acceptance and something of value at stake endures, regardless of technology or tone.
Long Island attorneys say businesses need to watch their words when the other side may have a formal deal in mind.
A 2016 appellate case shows how that can happen.
Vito Agosta assigned rights to an ammonia-fuel patent to Fast Systems Corp. and received shares in the company. Emails and other papers described $1 million for his patents, royalties, hourly pay and a 40 percent stake, but no shareholder agreement was ever signed.
When the relationship broke down, Agosta sued, asking the court to find that no binding contract existed and to dismiss Fast Systems’ breach-of-contract counterclaims. Suffolk Supreme Court Justice Elizabeth Emerson denied his motion for summary judgment, and the Appellate Division affirmed in 2016.
In Agosta v. Fast Systems Corp., the appeals court did not rule that Fast Systems had proved a contract. It held that related writings could be considered together and that Agosta’s typed name beneath an email could serve as a signature. Whether the parties agreed on every essential term remained a question for further proceedings.
John Diffley, counsel at Coffey Modica LLP in Islandia, warns against reading the final reply alone. “You might not just have one email. The terms may be scattered through a conversation,” he said. “We’ll piece them together, and collectively, they contain all the essential terms and it’s a writing.”
It still takes more than a stray “sure” to make a contract. The parties must have assented to terms a court can identify and enforce. Diffley said: “You have to have the material terms. You have to have the price.”
The ease of email can work against its sender. Patrick McCormick, senior partner and general counsel at Campolo, Middleton & McCormick LLP in Ronkonkoma, said people write casually “because everybody thinks they’re informal and they’re not real. It’s like a conversation, and that’s not the case.”
The court can also look beyond the inbox, at whether either side began work, transferred property or acted as though the bargain was settled. “The court will look at the totality of the actions,” McCormick noted. Agosta had, after all, assigned patent rights and taken shares while the planned agreement remained unsigned.
