Email correspondences are no longer just means of communicating with friends; they have become tools for binding legal contracts. We’ve talked in the past about how the elementary concepts of offer and acceptance can be unclear when it comes to email, and a recent Texas case explored the topic further.
In Dittman v Cerone, a handful of emails were sent between the parties, concerning a potential real estate purchase, which ultimately fell through. Cerone, the would-be buyer, sought specific performance, claiming that three particular emails, read together, constituted a valid option contract. A trial court agreed with him, and last month, the appeals court did too.
The Dittmans (the would-be sellers) raised the issue of incorporation by reference (remember first year contracts?), and argued that “[b]ecause none of the e-mails “plainly” refer to each other… they [could not] be construed together as one contract.” Not so in the Lone Star State, said the court, quoting a 2011 Texas Supreme Court case:
“It is well-established law that instruments pertaining to the same transaction may be read together to ascertain the parties’ intent.”
The essential terms of the contract, the court concludes, are evident from looking at the three emails in tandem, and so the validity of the option contract is upheld.
The Dittmans also brought up the statute of frauds, which, as you may recall, “requires that all contracts for the sale of real estate be in writing and signed by the person to be charged.” Their claims were that
the e-mails did not meet the statute of frauds because: they used “futuristic language”; they did not identify the property with reasonable certainty; they were signed with electronic signatures; and [the real estate broker] did not have authority to bind the Dittmans to an option contract.
The only one of these that concerns us here at IT-Lex is the electronic signatures question. (The other claims are dismissed after non-technology-related contracts analysis.) The validity of electronic transactions in Texas is determined “from the context and surrounding circumstances, including the parties’ conduct.” The Dittmans argue that they did not intend for the parties to “conduct transactions by electronic means”, but the court finds that the “trial court’s findings of facts are replete with instances where the parties exchanged communications regarding offers and counteroffers about the Stable Property via e-mail messages.”
Let’s be clear: it’s not the best idea to primarily conduct real estate negotiations over email. But since that is how so much business is conducted these days, opinions like this are useful in setting some rules for this emerging type of transaction.