CONTRACTS: Cyberlaw—Signed Email Constitutes Binding Legal Agreement

Monday, January 6, 2014

Our guest author of this is article is Charlene Hicks, a legal research attorney with National Legal Research Group in Charlottesville, Virginia.

Emails and other electronic communications are changing certain time-honored precepts of contract formation. Attorneys should be aware that what used to be considered standard negotiating procedures may now result in a contract binding upon their clients.

This trend is illuminated in Forcelli v. Gelco Corp., 109 A.D.3d 244, ___ N.Y.S.2d ___ (2013), a recent decision issued by the New York Appellate Division. There, an insurance claims agent negotiated with opposing counsel the terms of the settlement of a personal injury suit. These negotiations were conducted almost exclusively by email. The claims agent sent an email to opposing counsel that confirmed that the parties had reached an agreement as to the terms and the amount of the settlement and asked opposing counsel to prepare a release and dismissal for the agent's review. The email was signed "Thanks Brenda Green." Id. at 246, ___ N.Y.S.2d at ___. In accordance with this email, the claimants signed a release.

In the meantime, the court entered summary judgment in favor of the insurance carrier and dismissed the complaint. The insurance carrier then attempted to rescind its offer of settlement. Toward this end, the carrier claimed that no binding settlement contract had been consummated between the parties. In response, the claimants moved the court to vacate its summary judgment order and to enforce the settlement between the parties on the ground that the agent's signed email message constituted a binding written settlement agreement.

The trial court granted the claimants' motion and ordered the insurance carrier to pay the amount of the settlement to the claimants. On appeal, the appellate division affirmed. In so doing, the court found that the agent's email message set forth the material terms of the agreement and, significantly, that the "settlement was not conditioned on any further occurrence, such as the outcome of the motion for summary judgment or the formal execution of the release and stipulation of dismissal" by the carrier. Id. at 248, ___ N.Y.S.2d at ___. In addition, the court found that the agent's typed name at the end of the email message was sufficient to constitute a signature that rendered the agreement binding. The signature line in question showed that the agent "purposefully added her name to this particular email message" and thereby manifested the intent that the name be treated as a signature. Id. at 251, ___ N.Y.S.2d at ___. Thus, the court concluded that the email message was a subscribed writing that constituted an enforceable contract.

Forcelli serves as a strong caution to attorneys against the practice of treating emails as merely inconsequential or too casual a form of communication to create a contract binding upon their clients. The days when courts required ink signatures to formal paper documents are over. Thus, it may be advisable for counsel to consider adopting some type of disclaimer in their emails in order to prevent a transmission from giving rise to a binding legal agreement.

Additional Comment from George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law, President and Managing Partner, The Health Law Firm.

This is a subject that we emphasize with our clients over and over. One must treat e-mail today the same as typed letters on paper were previously treated. Too often we find out client (and others) hastily keyboard or text message a response with little forethought, no organization and no thought of the possible consequences it may have.

Following are a few tips we follow and urge others to follow:

1. Remember that e-mails are forever, especially with back-ups, archives and automatic saving of sent and deleted e-mails.
2. Be careful and thoughtful in the wording of your communications. Late at night when you are tired or after you have been imbibing is generally not a good time to be corresponding with business associates, clients and patients (or to be telephoning old girlfriends or ex-spouses).
3. Make sure the parties and subjects are completely and accurately identified. Be sure to fully identify yourself by name, address, title, company, telephone number, etc., the same as you would in a formal business letter.
4. Your e-mail/text message software should automatically include a signature block containing the above information as well as a caveat concerning lack of confidentiality of the communication (if applicable), no binding agreements being made through the e-mail/text message, etc.

About the Author: The author of this is article is Charlene Hicks, a legal research attorney with National Legal Research Group in Charlottesville, Virginia. This article appeared on The Lawletter Blog.

This article was originally published in The Lawletter Vol 38 No 9.

About Mr. Indest: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

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1/6/2014