Most of us know the basics of the Statute of Frauds: Certain contracts,including those pertaining to real estate, goods worth more than $500, and guarantees, as well as those that can’t be performed within one year, must be in writing and signed in order to be binding. In a recent case where I represented prospective purchasers of real property, the Massachusetts Superior Court found that an email exchange among parties pursuing a real estate purchase transaction satisfied the signature requirement embodied in the Statute of Frauds.
In Feldberg v. Coxall, buyers’ counsel emailed to seller’s counsel a proposed offer to purchase real estate which included a financing contingency. The next day, the seller emailed buyer’s counsel directly, stating that if a written approval letter from the buyer’s lender was received by 5 p.m., “I think we are ready to go.” Buyer’s counsel provided a lender’s commitment letter the same afternoon, before 5 p.m.
The transaction then fell apart, and the buyers ran to court to try to protect their deal. The seller contended that the email exchange did not satisfy the Statute of Frauds. Quoting out of state authority, the Massachusetts Superior Court noted that the courts have “not yet set forth rules of the road for the intersection between the seventeenth-century statute of frauds and twenty-first century electronic mail.” Calling the issue presented by the case one of first impression, the court stated that the Massachusetts Uniform Electronic Transactions Act (“MUETA”), was one attempt to provide those rules of the road to persons involved in real estate transactions.
That statute applies to “transactions between parties each of which has agreed to conduct transactions by electronic means,” and under that statute, whether the parties have so agreed is “determined from the context and surrounding circumstances, including the parties’ conduct.” MUETA §5. The Court noted that in using email to conduct negotiations, the parties could be found to have agreed to conduct the transaction by email. With regard to the signature requirement of the Statute of Frauds, MUETA §7(d) states that “if a law requires a signature, an electronic signature satisfies the law.” An electronic signature is “an electronic…symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” MUETA §2. According to the Court, both an email signature block, as well as the “from” portion of an email, may constitute a signature under the statute. Despite the lack of an agreement manually signed by the seller, the Superior Court denied the seller’s Motion to Dismiss and, effectively, held that the Statute of Fraud’s signature requirement can be satisfied through an email.
In light of this ruling, in-house counsel who deal with contracts that fall within the Statute of Frauds for any reason should be aware that any email exchange might satisfy the Statute’s requirement of a signature. Thus, if you do not want to bind your company by accident, you should consider including a disclaimer in your email. Failing to do so poses a risk of becoming unintentionally bound to a contractual obligation.