We’ve all heard of someone who hit the Enter key too quickly and sent an email he later regretted sending. Unfortunately, in some cases, the result is that the correspondents are deemed to have entered into a contract, without a formal writing and even in the face of evidence that the parties intended to later sign a formal contract. That was the case a few years ago when counsel for Amazon.com sent a one-word reply (“Correct”) to an email from opposing counsel outlining several specific terms of a settlement of a lawsuit. A Pennsylvania court faced a similar case in 2006, when it enforced an unsigned settlement agreement between Commerce Bank and First Union National Bank after concluding that the signing of the agreement was a mere formality since the parties had already evidenced their intent to be bound.
Both Federal and Pennsylvania state law authorize the signing of contracts by email or other electronic means. In both cases, the parties must agree to conduct the transaction by electronic means, a determination that is made by the context of the transaction and the surrounding facts and circumstances (such as the conduct of the parties). Under both statutes, certain contracts, such as wills, testamentary trusts, family law contracts, and certain commercial contracts are not covered and those agreements must be signed by pen and ink. More stringent rules apply to consumer contracts.
These cases and statutes are a wake-up call to anyone who relies on email exchanges to move transactions along (basically, everyone in the business world). To avoid having an email be treated as an unintentional contact, be careful what you say in the email (good advice under any circumstances) and consider including language that indicates that there is no binding agreement until both parties sign a formal written document.