In 2000, 12 billion emails were sent per day. By 2016, that number skyrocketed to 215.3 billion. Email has become the primary means of communication in business because it is immediate and easy. It has surpassed the telephone and almost made facsimiles obsolete. With the every increasing frequency of emails, it is important to know when an email exchange becomes a binding contract.
Gone are the days where a hard copy of a contract signed with an ink pen would be the only way for a contract to be formed. Courts in North Carolina and elsewhere have held that a series of emails and letters between two parties can, when taken as a whole, create a written contract. Currituck Assocs. – Residential P’ship v. Hollowell, 166 N.C. App. 17, 2004 N.C. App. LEXIS 1644 (N.C. Ct. App. 2004). North Carolina has adopted the Uniform Electronic Transactions Act which provides that the sender’s printed name at the end of an email, in the email’s signature block, or even in the “From” line can be a sufficient electronic signature to bind the sender to a contract formed by an email exchange. (N.C. Gen. Stat. §66-311 et. seq.).
In Hunter-Rainey v. N.C. Cent. Univ., 2016 N.C. App. LEXIS 108 (N.C. Ct. App. 2016), plaintiff sued her employer, North Carolina Central University (NCCU), arguing that NCCU’s failure to provide her timely notice denying her tenure obligated NCCU to provide her with a terminal year of employment. After plaintiff was denied tenure in September 2010, she emailed her Dean requesting a one-year extension of her tenure review. The Dean responded to her email stating, “you are herein offered a one year extension for tenure review; this proposal means your contract will be extended until May 2013.” The Court of Appeals ruled for plaintiff, holding that NCCU expressly offered plaintiff a contract extension until 2013, and that plaintiff accepted the offer.
Other cases have resulted in different outcomes. For example, in Ray Lackey Enters., Inc. v. Vill. Inn Lakeside, Inc., 2016 NCBC LEXIS 9 (N.C. Super. Ct. 2016), the Business Court held that plaintiff’s counsel’s email communications regarding settlement documents did not give rise to a binding agreement. After a mediated settlement conference, and an exchange of emails with redlined versions of documents being exchanged, plaintiff’s counsel stated, “The revisions to the confidentiality agreement are fine with us. Talk to you next week.” Defendants argued that this email constituted full acceptance of the settlement documents. However, at the conclusion of the mediation, the lawyers all had signed a “term sheet” which began by stating: “Below outlines the terms of a proposed settlement structure, all of which is subject to signed definitive agreements.” The Court held that in view of this disclaimer, the email exchange did not create a binding agreement.
Whether or not an email exchange results in a contract depends on a great many factors, and these always require caution and good legal counsel. Consider these general guidelines:
1. If you do not intend to enter into a contract via email, explicitly state so in the email.
2. Include language in the email that a separate, written agreement must be executed by someone who has the authority to sign a contract for you or your business, before you will be bound.
3. Consider a disclaimer to be sent with all of your email messages. Here are a few examples:
a. “The preceding terms are subject to review and approval, and are nonbinding until the signing of a physically executed, formal, written agreement between the parties.”
b. “My email signature block does not constitute a signed writing for purposes of a binding contract.”
c. “The sender of this email is not authorized, and has no intent, to make offers or contracts by email.”
Should you have questions or concerns regarding “email contracts” or any other business related issues, please call one of our business attorneys at 704-892-1699.
Co-authored by Rachel Garcia and Jesse Jones (see more below)