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Be Careful What You Text – You Could Be Entering Into A Contract

On Behalf of | Oct 7, 2016 | Construction Litigation |

As the world continues to progress further into the Information Age, communication has become quick and instantaneous. The advent of the internet, email, and cell phones has made it easy to communicate efficiently with people on the other side of the world. Business transactions no longer have to be completed by mail, in person, or even by fax. Many times we engage in business transactions with emails or over the internet. Online shopping is a perfect example.

Your text to a real estate developer or contractor, may become binding

These quick text messages and email exchanges have important implications for real estate. Does agreement over email or text message indicate a binding contract between two parties? A Massachusetts court case between St. Johns Holdings and Two Electronics investigated this very issue. St. Johns Holdings was in discussions with Two Electronics to purchase the property that Two Electronics owned earlier in 2016. The owner of Two Electronics had received an email from the owner of St. Johns Holdings to purchase the property for $3,232,0000. After several discussions about the various terms of the contract, Two Electronics received a signed letter of intent to purchase the property for the final price of $3,080,000 in February of 2016. The two parties exchanged multiple emails and text messages deciding where to meet to exchange hard copies of this letter and make the deal final. During the ensuing two days, the owners of Two Electronics had a disagreement and refused to deliver the final letter of intent to St. Johns Holdings. St. Johns Holdings filed a formal complaint in Massachusetts court alleging that these email and text message exchanges constituted a binding contract.

The crux of the court case centers around an important question. Do electronic communications discussing business matters constitute a binding agreement enforceable in a court of law in real estate matters? Two Electronics filed a formal motion to dismiss on the grounds that electronic communications are not binding agreements and therefore are not enforceable. St. Johns Holdings disagrees and would like the terms of the letter of intent carried out.

At what point do text messages become legal agreements?

In legal terms, the formation of a legally enforceable contract requires a clear offer, a clear acceptance of the offer, and agreement by both parties on the terms included in the offer. Multiple prior cases, such as Slover v. Carpenter, have sufficiently set the precedent that the terms in the contract must be clear, complete, and definite. If these criteria are met, both parties are legally bound by the terms. A signature by both parties constitutes an agreement to the terms above.

The next question is whether or not these text messages and emails can be considered writing. This is important due to the Statute of Frauds, which refers to the requirement that specified contracts, such as real estate, must be handled in writing, signed by both parties, and that the contract has sufficient and clear evidence as defined above. Two Electronics argues that text messages are not writing and do not satisfy the Statute of Frauds. St. Johns Holdings disagrees.

The courts aren’t quite sure what category of law to file it under

The question of whether text messages are writing under the Statute of Frauds is new for the court system given that relatively recent development of this technology. The most similar form of communication to text messages is an email. Two Electronics pointed to a precedent set by Singer v. Adamson (2005), where a court ruled that emails did not satisfy the Statute of Frauds. The court stated that emails are casual and thus lack the substance to satisfy the Statute. Since this time, technology has progressed to the point that text messages and emails can contain more substance and satisfy the Statute of Frauds. Many subsequent court cases, such as Feldberg v. Coxall (2012) have ruled that emails do satisfy the Statute of Frauds. Furthermore, Shattuck v. Klotzbach (2001) involved a court denying the defendant’s motion to dismiss, ruling that the emails did satisfy the Statute of Frauds. On these grounds, Two Electronics’ motion to dismiss was denied.

This has many important implications for homeowners and contractors, even in the state of North Carolina. If text messages and emails have enough information to satisfy a full contract, a signature can make the contract binding under the Statute of Frauds. Be careful when negotiating real estate matters electronically and hold the other party accountable for their actions.

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