Question and Answer Regarding Whether Emails Create a Binding Contract

Question: Can emails create a binding contract?

Answer: Recently, an appellate court in New York held that emails between a buyer and seller may constitute a formal binding contract. In Stonehill Capital Management v. Bank of the West 28 NY3D 439, 2016, an appellate court upheld a contract entered into by parties when the seller "agreed" to accepted the option bidders bid in an email that set forth all the material terms of the deal, including the sales price, specific loan to be sold, timing of the closing and manner of payment and wire transfer information. In that email, the seller had stated that its acceptance "was subject to mutual execution of an acceptable [loan sale agreement]," which was never executed. Nevertheless, the New York appellate court found that by establishing these elements, the requirement of Statute of Frauds was met.

Currently, there are no cases in California where in a court issued a similar decision. However, it is entirely likely that under similar circumstances, a California appellate court could find in a similar manner.

Parties are cautioned that when emailing terms of a contract, they do not establish their agreement to those terms. Nevertheless, as a reminder, real estate agents, unless provided specific authority to do so, may not enter into contracts on behalf of their clients. This is beyond the scope of the agency relationship.

-Shannon B. Jones, Partner, sbj@sbj-law.com

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