Buyer Beware: Over the internet

In Shattuck v. Klotzbach, Civ. Act. No. 01-1109A (Superior Ct., Mass., December 11, 2001), the court had to decide whether the exchange of e-mails between parties was sufficient to give rise to a contract of sale. Over a period of five months the two parties exchanged e-mails in which they eventually agreed on a selling price for a property, a ten percent down payment and eliminated financial and other contingencies. They also referred to a purchase and sale agreement that they wished to have prepared as soon as possible.

All of the e-mails ended with the typed name of the sender. However, when the plaintiff brought a claim to enforce the sale of the property, the defendant moved to dismiss it by countering that the contract was barred by the Statute of Frauds because it was not evidenced in writing. Judge Ernest Murphy denied the defendant's motion to dismiss because the e-mails taken together constituted a legally binding purchase and sale agreement.

The Judge said, "Here, all e-mail correspondence between the parties contained a typewritten signature at the end. Taken as a whole, a reasonable trier of fact could conclude that the e-mails sent by the defendant were "signed" with the intent to authenticate the information contained therein as his act. Moreover, courts have held that a telegram may be a signed writing sufficient to satisfy the statute of frauds. This court believes that the typed name at the end of an e-mail is more indicative of a party's intent to authenticate than that of a telegram as the sender of an e-mail types and sends the message on his own accord and types his own name as he so chooses. In the case at bar, the defendant sent e-mails regarding the sale of the property and intentionally and deliberately typed his name at the end of all such e-mails. A reasonable trier of fact could conclude that the e-mails sent by the defendant regarding the terms of the sale of the property were intended to be authenticated by the defendant's deliberate choice to type his name at the conclusion of all e-mails."

He also said that the combined e-mails contained all the necessary terms for a contract of sale: identification of the parties, the purchase price, a property description, an earnest money deposit and no contingencies to the sale and purchase of the home.

This decision raises two interesting issues. Firstly, it means that under certain circumstances e-mail is raised from being a mere method of communication to that of a formal, binding document. The other is more problematic because collectively the e-mails did not constitute a single contract; some of the essential elements were missing. These elements were: the mention of a closing date, the quality of the title, as well as the fact that other documents had to be exchanged at the closing.

It was a bad ruling, even though some courts in the United States have recently begun enforcing documents that contain the barest terms as binding contracts. It does however instruct firms to be careful in business dealings they conduct via e-mail. They should carefully circumscribe what is being agreed upon.