When most non-lawyers think of a legally binding contract, they envision a document written out on paper that contains well-thought-out paragraphs detailing the rights and obligations of all interested parties. They envision the parties looking over the contract carefully, sometimes with their lawyers standing by, and signing the document to immortalize their agreement. But in today’s age of instantaneous electronic communications, we can interact with one another with lightning speed compared to just a few decades ago. And while quick and easy email communication certainly has its advantages, for some unsuspecting people, it can have a downside.
Are Emails Legally Binding?
But is an email a legal document? Can an email, or series of emails, be used to prove that an enforceable contract was created that binds the parties? The short answer to this question may surprise you—because the answer is “Yes.”
This throws off many businesses and customers who believe that they must sign a paper document before being legally bound to a contract. This is simply untrue and no longer the case throughout most of America. In fact, it is critical that consumers and business owners alike understand that seemingly casual email exchanges can result in a legally binding agreement if the exchange meets the requirements for contract formation. Basic contract law requires these elements to form a binding contract:
- Consideration, and
In addition to the above elements, a real estate contract (and certain other contracts) must satisfy the statute of frauds. But let’s begin by examining the first four elements listed.
Offer, Acceptance, and Consideration
To form a contract, electronic communications must satisfy these essential elements of contract law. One party must make an offer, and the other party must accept that offer. The offer and acceptance must be specific enough for a court to enforce. In other words, it must state the number of items, the price, and the timing of the transaction.
Washington law also requires consideration, which is an exchange of benefits and detriments. For instance, if Sue sells her sewing machine to Anne for $50, Sue gets $50 but she gives up a sewing machine. Likewise, Anne loses $50 but gains a sewing machine. This is what the law means when it speaks of valuable consideration.
As long as the bargaining parties are mentally fit, a binding contract exists if the transaction satisfies these elements.
Statute of Frauds
But what about the statute of frauds? This law mandates that certain contracts, including real estate contracts and those for the sale of goods over $500, be in writing and signed by the party to be bound. To determine if Washington State allows emails to satisfy these requirements, we must look at our current electronic communications laws.
State and Federal Law
As far back as 1999, our government recognized the ever-increasing growth of electronic communications used by individuals and businesses alike. It was evident that we needed laws to address the growing number of commercial transactions happening via email. The legislature needed to confront two key issues. First, does an email or series of emails constitute a “writing” as required by the statute of frauds? And second, does an “electronic signature” fulfill the signature requirement?
In 1999, the National Conference of Commissioners on Uniform State Laws created the Uniform Electronic Transactions Act (UETA). This was the state counterpart to a federal law called the Electronic Signature in Global and National Commerce Act (E-Sign). Both of these acts have the same goal: to allow commercial transactions to take place via electronic communications and signatures. Both statutes legitimize electronic writings and signatures and declare that such writings and signatures fulfill the statute of frauds’ requirements. However, E-Sign is a federal law that does not apply directly to the states unless they adopt the UETA. Up until quite recently, Washington was one of only three states that did not adopt the UETA.
Washington State and the UETA
Before the UETA became law, Washington enacted the Washington Electronic Authentication Act (WEAA) in 1997. Because of that, the Washington legislature did not adopt the UETA. However, the WEAA was narrower in scope than the UETA and did not cover all transactions. Therefore, the state legislature made several amendments to the WEAA over the years to widen its scope. But these amendments ultimately resulted in inconsistencies and loopholes in Washington’s electronic communications laws.
Fortunately, that all changed when our legislature repealed the WEAA in its entirety in 2019. Then, after over 20 years of being one out of only three hold-out states, in 2020, Washington adopted the UETA into state law. Now, we join 47 other states, Puerto Rico, DC, and the Virgin Islands in allowing electronic signatures to replace wet ink signatures for contract formation purposes. In other words, electronic writings and signatures can now hold up in court as the basis for contract formation—even when the statute of frauds covers the contract.
Bottom Line: Write Emails Carefully
What does all of this mean in the simplest of terms? It means that you must be careful about what you write in an email, particularly in business. If an email or series of emails shows an intent to enter into an agreement, you may have a legal contract on your hands. If your name appears anywhere on the email—even in the header or in an automatic signature—many courts now uphold those as valid signatures for the purposes of contract formation.
That is not to say that every single email that discusses terms will bind you contractually. But if the opposing party can show that an offer was made and accepted, that consideration was given, and that an electronic signature exists, you may find yourself in a legally binding contract whether you meant to be or not. So be careful, and teach your employees to email with care. Choose your words wisely. And if you explicitly do not wish to be bound in any transaction, you must state that plainly and obviously in your emails.
Experienced Real Estate Legal Team Can Help
The attorneys at Bolan Law Group., have decades of experience in real estate law. We are familiar with the intricacies of contract law, the recently adopted UETA, and how it applies to real estate transactions. As technology changes our lives, it is easy to become confused about the legality of certain client communications. If you have any questions or concerns about real estate law in general or how to avoid inadvertently creating a contract when you did not intend to, we have the answers. We want to protect your legal rights. So call us directly or contact us online today for an initial consultation.