Enforeceable contracts made by email

Posted on March 28, 2013 Updated on March 6, 2014

With today’s electronic world, the issue of whether you can create a binding contract through email signatures often comes up in business.  In Texas, the elements that are generally required to create an enforceable contract are (1)  an offer; (2) acceptance in strict compliance with terms of the offer; (3)  a meeting of the minds with respect to both the subject matter of the agreement and all of its essential terms;  (4) a communication that each party has consented to the terms of the agreement;  (5) for a written contract, execution and delivery of the contract with an intent that it become mutual and binding on both parties; and  (6) consideration (the giving of something of value).

In Texas, a contract may be written or oral, unless the contract is required by law to be in writing.  A written contract must spell out the agreement and be signed by both parties.  An example of a contract required to be in writing is a settlement agreement in a lawsuit, which must also be signed by the parties and filed with the court to be binding.

The Texas Uniform Electronic Transaction Act allows for electronic signatures to create an agreement.  Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct.   UETA allows for the enforceability of electronic signatures once the parties to a transaction have decided to carry on dealings by electronic means. In Texas, the Courts have consistently held that an email signature is comparable to a manual signature. Therefore, if someone makes an offer to settle a matter with you and you then accept that offer, all by email, then a contract has been created.

A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means.  If you no longer want to transact business by electronic means, you just need to notify the other party in writing that you no longer agree to conduct business by email.

If you want to ensure you do not create a contract by email, you might consider putting a disclaimer on your emails that states:  “This email is not intended to create or form a contract between the parties”.  This may be ineffective if the substantive body of the email contradict and override this statement, so I suggest starting your email out with this language.