Law of the market: can emails be contracts?

In recent years, e-mail and SMS (which together I will simply refer to as “e-mail”) have become the most important tools of business and legal communication. And over the past two years, Zoom meetings and other virtual meetings have become the second most important.

So if you’re a business owner, you need to answer the question of whether something you say to a customer, supplier, or other third party in an email or Zoom call can bind you as if it was set out in a written contract.

Say, for example, your company makes widgets and you’re on a Zoom call with Joe Blow, a key supplier. And imagine that after a long discussion, you say: “Joe, your offer makes sense” and Joe says: “It’s a deal”. When he says that, is your company bound by a contract with Joe?

The short answer may well be yes, provided that when Joe’s record is transcribed, the transcript meets three main legal criteria:

The first is whether what you said constitutes a valid offer. It will pass this test if you have the authority to represent your businesses and if, taken together, your words and those of Joe in the transcript address and resolve all key terms reasonably essential to your transaction.

The second is whether Joe accepted your offer. Maybe when, on your Zoom call, Joe said “it’s a deal”, you thought he meant, “it’s a deal as soon as we work out a few potentially important remaining details in this deal” . Good luck with that argument. A deal is a deal.

The third criterion is whether there is “adequacy of consideration”. It means that both parties get something out of the deal. Again, the transcript will indicate whether you and Joe passed this test.

So what’s the bottom line? There are two of them.

1. Even emails and Zoom calls can easily link you to deals you don’t want. Zoom emails and communications often have a friendly and informal feel. But be careful what you say there.

2. If a deal is high stakes for your business, never agree to it in an email or Zoom call. Put it in writing in a carefully drafted contract.

John Cunningham is an attorney licensed to practice law in New Hampshire and Massachusetts. He is legal counsel for the law firm McLane Middleton, PA. Contact him at 856-7172 or lawjmc@comcast.net. His website is llc199a.com. To access all of his Law in the Marketplace columns, visit concordmonitor.com.

Law in the Marketplace is a legal advice section. It airs weekly in the Sunday Business section. The author is a lawyer at Concord and is not a staff member of the Monitor.