Emails Can Create Enforceable Contracts

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Emails Can Create Enforceable Contracts

October 20, 2015

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Email has become the standard form of written communication in the business world.  It should come as no surprise that the laws have adapted to accommodate this new age of electronic communication.  We routinely enter into contracts while shopping online, but the formality of the experience leaves little question that we are entering into an enforceable agreement.  What many of us fail to recognize is that an enforceable agreement can be reached as a result of an exchange of emails.The Texas Uniform Electronic Transactions Act, Chapter 322 of the Texas Business & Commerce Code, is the law applicable to the creation of enforceable contracts by electronic means.  For the purpose of this article, there are two provisions of the Act that are of particular interest:

  • 322.002(8) – “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.
  • 322.005(b) – This chapter applies only to transactions between parties each of which has agreed to conduct transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct.  (Emphasis added).

The definition of “electronic signature” is so broad as to include a standard typed “signature” attached to most emails.  If you have created a standard email template that includes your typed signature, then you are intending to sign it.  If you are intending to sign the email, then even your standard typed email signature will be an “electronic signature” for the purpose of the Act.

Section 322.005(b) requires that the parties agree to conduct transactions by electronic means.  If it was left at that, then there would be little cause for concern or argument, but that is not the case.  The statute allows the courts to look beyond the existence of an express agreement to determine whether the parties impliedly consented to transact business electronically.  Given the amount of business conducted via email, a party would be hard pressed to argue that it had not impliedly consented to transact business by electronic means.

            The most recent case interpreting the Act comes out of the Federal District Court for the Northern District of Texas.  In the case of Williamson v. Bank of New York Mellon, 947 F.Supp.2d 704 (N.D. Tex 2013), the attorneys for the parties exchanged emails regarding settlement terms and reached an agreement.  After the emails were exchanged, the plaintiff fired her attorney and refused to abide by the terms of the negotiated settlement.  The defendant filed the emails with the court and sought to enforce the agreement pursuant to Texas Rule of Civil Procedure 11.  The issue before the court was whether the emails constituted a signed written agreement between the attorneys.  In finding that the emails constituted a signed written agreement, the court applied the Texas Uniform Electronic Transactions Act and concluded that the plaintiff’s former attorney’s act of signing his email with his typed name was sufficient to create a contract under the Act.  Specifically, the court held, “A typed name at the end of an email is similar to a ‘signature’ on a telegram, the latter of which can satisfy the statute of frauds.”  Id. at 709.

            In its opinion, the Federal Court specifically disagrees with an earlier opinion out of the Fort Worth Court of Appeals entitled Cunningham v. Zurich Am. Ins. Co., 352 S.W.3d 519, 530 (Tex.App. – Fort Worth 2011, pet. denied).  The facts in Cunningham are very similar to the facts in Williamson.   In the Cunningham case, the court concluded that a standard signature block did not evince an intent to sign an email under the Act.  The Federal Court rejects this decision on well-reasoned grounds:  1) the attorney created the signature block and directed his email client to attach it to his outgoing emails; 2) the Act is to be construed broadly; and 3) allowing a signature block to have the same effect as a typed signature is consistent with reasonable practices concerning electronic transactions and with the continued expansion of those practices.  Williamson, 947 F.Supp.2d at 710-11.  In practice, the Fort Worth’s opinion will be controlling within its jurisdiction, but it will be on equal footing with the Williamson opinion as persuasive case law throughout the rest of Texas.

            In conclusion, it is important to be aware that your typed signature on an email may create an enforceable contract.  The best practice would be to treat your emails like the typed, wet-signature, letters of yesteryear.  In the alternative, if you wanted to be particularly careful, you may consider ditching your standard signature block or amend it to specifically disclaim an intent to transact business via email.

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