Can emails and text messages constitute a legally binding agreement? A basic binding contract must comprise of four key elements: there must be an offer, acceptance of this offer, consideration and the intention by both parties to create legal relations.
One of the repeated misconceptions is that businesses and consumers tend to assume that provided they haven’t signed a document, there’s no way they can be bound to an email or text message. Indeed, consumers and businesses are often quite surprised, and, in some cases alarmed, to learn that seemingly casual conversations, which contain relevant language, can be sufficient enough to create a legally binding contract or even a guarantee.
In multiple recent cases, it has been confirmed that an enforceable guarantee can be created by a series of emails authenticated by the online signature of the guarantor. Say for instance, two parties exchange a series of emails where they agree to amendments to a standard-form document. Even though the language used in the exchanges may be far from formal legalese and there is never a full and complete agreement incorporating all of the key terms executed, the parties intend to be bound by the terms which they informally negotiate and agree upon in the email exchanges. If a person put their name on an email to indicate that it comes with his/her authority and takes responsibility for its contents, it will be deemed to be a signature for the purpose of an agreement. This also applies when only the first name, initials or perhaps even when just a nickname is used.
It’s important to remember that if you do not want to create an enforceable agreement or guarantee while negotiating in writing via text or email, make it clear that you are negotiating ‘subject to contract’ and do not intend to be bound until a formal document is executed.
