Promises, Promises - Don't Let Your Email Become a Binding Contract
May 14, 2015 —A fast response to an inquiry can result in a legally binding agreement.
Email has made communication faster, but just like driving, the faster you go, the greater the danger. We often treat email as a sort of hybrid telephone conversation, but in the court’s eyes, your name at the bottom of your email count as a signature, even creating a legally binding real estate contract. Watch what you say in your emails for this reason.
Rules on Electronic Signatures
The federal Electronic Signatures in Global and National Commerce Act applies to all interstate and foreign transactions. Most states have enacted some version of the Uniform Electronic Transactions Act. Washington State enacted the Electronic Authentication Act in 1997, at chapter 19.34 of the Revised Code of Washington. There are no requirements placed on electronic signatures, other than they be attached or logically associated with an electronic record.
This means that an agreement made in email is binding, even without a scanned copy of your hand-written signature. Your name, typed in the signature portion of an email coming from you is enough to create a legally binding signature.
Real Estate Contracts and Electronic Signatures
In real estate, there are several elements to an agreement required for a binding contract. The property description, price, financing and closing date must be included., If such an agreement is made but the parties cannot agree on ancillary terms of the sale, the agreement should not normally be binding, but the advent of emails pertaining to such terms can allow each side to argue that a binding agreement exists, or does not exist, depending on the position that suits them best. Uncertainty becomes the only certainty, which is never desirable.
The Importance of Effective Disclaimers
The best way to avoid the email trap is to use a disclaimer. Businesses can require all outgoing emails to state that employees do not have the power to enter into a binding contract. Several versions of this can be applied. It’s a good idea to check with an attorney before applying a disclaimer to ensure it adequately protects your business.
Email disclaimers have a strong track record for protecting businesses. A lack of an email disclaimer puts you in a precarious position should an employee inadvertently disclose private information or enter into a binding agreement that the business would not authorize. As with all disclaimers, there must be sufficient detail to address the issues contended. A confidentiality notice will not protect against a binding agreement made via email.
We Take Protecting Your Business Seriously
Call our office at 253.302.5955, or use the online contact form to arrange for a business legal consultation where we’ll review your email practices, offer guidance, and find the best method for reducing the legal risks.
