Can an E-mail Agreement Be a Binding Contract?

Much of today's business is conducted via e-mail, and it's possible to bind yourself to a contract through e-mail, either deliberately or inadvertently.

If an e-mail or chain of e-mails clearly states an offer for entering into a deal with all of the material terms and the other side responds by e-mail accepting the terms, then there's a good chance that a valid contract has been formed — even though no signatures have been exchanged. So be careful. If all you intend is to negotiate the issues leading to a formal written and signed contract accepted by both parties, make sure you say that in your e-mails.

In addition, in June 2000, President Clinton signed the Electronic Signatures in Global and National Commerce Act, which set a single national standard for using electronic signatures in contracts and other legal agreements. The law allows businesses to send copies of signed documents electronically and to store archived copies of these documents in electronic form. Although there are certain exceptions, many routine commercial transactions are covered under this law. The law even allows for the electronic notarization of legal documents.

The most important consequence is the fact that consumers can now "sign" contracts over the Web by simply pushing a button, clicking a link, or completing some other simple action. This means that two parties can negotiate, sign and exchange copies of a contract without ever meeting face to face, signing a physical document or producing a hard copy of an agreement. And, as far as the law is concerned, such an agreement can be just as valid as a written agreement using actual signatures.

The law specifies a list of documents that cannot be signed electronically, including: wills, trusts and estates; marriages, divorces, adoptions and other family agreements; court documents and filings; utility service terminations; evictions, foreclosures and repossession notices; health and life insurance termination notices; and documents referring to the handling or transportation of hazardous materials. State laws may also require that certain types of contracts, such as real estate purchase agreements, need to be in writing and signed by the parties.