By Steve Thorpe
Legal News
Two recent court decisions, Waddle v Elrod and Republic Bank Inc. v West Penn Allegheny Health System Inc., reaffirm that exchanges of email messages can result in binding contracts. A growing number of courts are following this reasoning by construing e-mail on the same level with more traditional means of correspondence. Kathryn L. Ossian of Miller Canfield has extensive experience representing technology clients, including helping them draft their standard technology agreements and keeping them updated on legal developments in the field.
Thorpe: Is it hard to get clients to take e-mail issues seriously?
Ossian: It was more difficult in the past but is becoming less so given the number of court decisions involving email. Emerging legal issues involving texting and use of social media have also helped clients become more focused on these types of issues.
Thorpe: In Republic Bank Inc. v West Penn Allegheny Health System Inc., a hospital pointed to a lack of paper documentation to try and void a contract but the court ruled, and was upheld on appeal, that a valid contract was formed through email exchanges. Tell us about that.
Ossian: The court found that the exchange of multiple messages between the parties contained the necessary elements of a contract -- offer, acceptance, consideration and mutual assent. The essential terms such as price and quantity were also included. When the bank attempted to enforce the agreed upon terms, the hospital raised the Uniform Commercial Code's "writing" requirement as a defense. The court easily dismissed this, finding that the email messages were writings sufficient to satisfy the UCC requirement. The decision recognizes the frequent and common use of email in commercial settings, including for contract negotiation and formation.
Thorpe: In Waddle v Elrod, the court ruled that an attorney's "signature" at the bottom of the email message rendered it a "signed memorandum." Was that a surprise?
Ossian: No, because the Statute of Frauds focuses on the writing being authentic. Even though this case involved the transfer of real property, a matter that falls under the Statute of Frauds, neither party claimed that the email message was not theirs (or that of their attorney). Electronic signatures have received legal recognition for over a decade. The federal Electronic Signatures in Global and National Commerce Act (E-Sign Act) has been on the books since 2000.
Thorpe: Where do you think e-mail law is going? What new wrinkles might we see?
Ossian: While the court decisions thus far have involved commercial contracts, settlement agreements and even the sale of real property, I've yet to see a case validating a will, trust or similar instrument via email. As even the E-Sign Act exempts those types of instruments, it may be a long while before wevsee a decision like that.
Thorpe: With the current state of law on the subject, what's the most important part of any company's e-mail policy?
Ossian: Many elements of an organization's policy are impacted by these decisions, including examples of situations where the use of email is not recommended and the effective use of disclaimers. Existing policies should be reviewed and updated as needed given the current legal climate.
Thorpe: How do texting and tweeting fit into the picture? Would they be affected by these rulings?
Ossian: Certainly texts and tweets could also be held to form the basis for binding agreements. Last year, a federal court in Florida held that instant messages exchanged between representatives of companies "operate collectively as an unsigned writing containing the terms of the agreement to modify" a contract between the parties. After a five day trial, the court awarded damages of over $1.2 million dollars based on the amended contract terms.
Thorpe: Are there concerns about juries and social media; texting; tweeting? Any law being made there?
Ossian: Yes. there are a number of court decisions over the past few years addressing motions for mistrial based on a juror's improper use of social media or other Internet access while sitting in trial. The Michigan Supreme Court enacted a rule prohibiting jurors from using electronic devices in the court or during deliberations. This continues to be a major concern for judges and litigants.
Thorpe: Can you foresee a day when a decision similar to Republic Bank Inc. v West Penn Allegheny Health System Inc. could be rendered over exchanges on Facebook or Twitter?
Ossian: Absolutely, it is just a matter of time.
Published: Thu, May 24, 2012
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