You are emailing the all kinds of details of a transaction back and forth, setting out price, terms and specific details on behalf of your client. Suddenly, both parties are in full agreement with everything as set out in the email exchanges, did you just bind them into a contract without ever executing a document?
Use Caution When Negotiating Via Email
A Massachusetts superior court recently held that a series of emails, one of which containing an unsigned Offer to Purchase, could satisfy the Statute of Frauds to bind a buyer and seller of real estate to an agreement, if the material terms of the agreement were present and the parties, through their conduct, displayed intent to be bound. In the case of Feldberg, et al. v. Coxall, the exchange of emails was between the attorneys for the buyer and seller.
Throughout the course of the transaction, the parties communicated through email. This case hinged specifically on several exchanges, namely, the emails with an Offer to Purchase attached and the seller’s attorney’s response. The buyer’s attorney attached an unsigned “revised offer” which included the material terms of the offer: a purchased price, a property description, and a closing date. The seller’s attorney responded by requesting written approval by the bank that day “and I think we are ready to go.” The Buyer’s Attorney responded several hours later with a copy of the commitment letter from the bank.
An Agreement May be Valid if the Parties Intend to be Bound
The first question the court considered was whether the parties intended to be bound by the email exchange. The court applied the same rule as it did in McCarthy v Tobin: an enforceable agreement requires all material and definite terms, and also a present intent of the parties at the time of the formation to be bound by those terms. The court held that both elements were satisfied, because the offer and commitment letter, although unsigned, contained all of the material and definite terms of the agreement. Also, because of the conduct of the parties throughout the transaction, the court held that the parties had requisite intent to be bound by that agreement. Moreover, the court found that the parties displayed the necessary intent to conduct the transaction by electronic means. Under the Massachusetts Uniform Electronic Transactions Act, enacted in 2004, a person’s consent to delivery of documents electronically may be determined based upon the circumstances as well as the conduct of the parties. It also provides that a party may withdraw consent.
What REALTORS® Can Do to Protect Themselves
Because the decision of Feldberg, et al. v. Coxall was made by a superior court judge, not by an appellate panel or the Supreme Judicial Court, it is not binding as precedent on any other court. However, the case does provide a cautionary tale to those who do use email to transact business. The use of email has become increasing more common in real estate transactions and it can be an extremely convenient tool to facilitate negotiations. However, caution should be exercised.
When negotiating a transaction via email, questions may arise about whether or not your email communications create any legal obligations for your client. To clarify any of these questions, it is wise to consider the desires of the client in forming an agreement and to be very clear in your email about the intent of the client to form a binding agreement.
All REALTORS® should seek legal advice to draft a disclosure similar to the general example below:
"Nothing in this email shall be deemed to create a binding contract to purchase/sell real estate. The sender of this email does not have the authority to bind a buyer or seller to a contract via written or verbal communications including, but not limited to, email communications."