Even now email continues to have an “informal” character, business transactions occurring over email thread may, in certain circumstances, create a binding contract.
With this in mind, companies can avoid significant expense in relation to unintended contract obligations and litigation by simply addressing how their employees – especially those in sales or purchasing – conduct business through email.
The backdrop for this recommendation arises out of a matter where I’ve filed a motion to enforce a settlement agreement. The attorneys of record who were involved with the underlying case and in the circumstances leading up to and resulting in the settlement had seemingly reached the agreement now being disputed through email. One party, however, is claiming that the email arguably forming the acceptance should be disregarded.
The offer and acceptance comprising the settlement agreement was not as “clean” as I would have preferred. For example the acceptance was an email from the Plaintiff’s attorney that was simply signed “Jim.” Also, the terms of the settlement payment had been previously reached at a deposition so the email simply referred back to those discussions.
Michigan Law Generally Enforces Electronic Signatures
Even so, under Michigan’s Uniform Electronic Transactions Act (UETA) a “record or signature shall not be denied legal effect or enforceability solely because it is in electronic form.” MCL § 450.837. In other words, a party cannot argue that an email acceptance of an agreement (in this case a settlement agreement) should be disregarded simply because the acceptance occurred by way of email.
While there are nuances to this general rule, Michigan courts have addressed my particular issue on substantially similar facts. In Kloian v Domino’s Pizza, LLC, 273 Mich App 449, 454; 733 NW 2d 766 (2006), the court enforced a settlement agreement reached through email communications.
Email Signatures and the Workplace
The above discussion about email contracting takes place in the context of settling a legal claim. But the same principles generally apply to private parties forming and enforcing a contract.
Interestingly the Wall Street Journal recently published an article deriding the use of inflated email disclaimers (subscription required). But I think the better practice is to view email disclaimers as a very cheap insurance policy against a company’s employee inadvertently entering into an enforceable contract through email communications.
Accordingly, businesses should consider including a disclaimer, or take other steps to demonstrating that an e-mail is not intended to bind the sender. For example, I use the following language in my email disclaimer:
Also, nothing in this e-mail is intended to constitute an electronic signature for purposes of the Electronic Signatures in Global and National Commerce Act (E-Sign Act), 15, U.S.C. §§ 7001 to 7006 or Michigan’s Uniform Electronic Transactions Act, MCL § 450. 831, et seq., unless a specific statement to the contrary is included in this e-mail.
Would this disclaimer defeat a contract claim? Perhaps. But in answering this question, I’m reminded of a very underrated movie, True Romance. In this movie, the lead character, Clarence Worley played by Christian Slater, delivers the following line: “If there’s one thing this last week has taught me, it’s better to have a gun and not need it than to need a gun and not have it.”
Turning back to the motion to enforce the settlement agreement, there is no email disclaimer whatsoever that would arguably give the court a reason to disregard the email acceptance (the email was sent from the attorney’s Yahoo! account, which is another story). But I’m sure the party opposing the settlement now wishes there was such a disclaimer.