In Stevens v. Publicis, S.A., Stevens sold his New York public relations firm to Publicis, S.A., a French communications company. As part of the transaction, Stevens signed an employment agreement to continue as chairman and chief executive officer of the transferred business. Under the employment agreement, any modification was ineffective unless set out in writing and signed by both parties. After the sale, the business faltered and failed to meet revenue and profit targets. Stevens was removed as CEO and given the option to either continue with the business in another capacity or leave. Stevens and a Publicis executive, Bob Bloom, exchanged a series of emails culminating in an email from Bloom outlining an option for Stevens to continue with the business while devoting most of his time to business development. Stevens responded by email to Bloom, stating, in relevant part, “I accept your proposal with total enthusiasm and excitement.” Bloom emailed the same day stating that he was “thrilled with [Stevens’] decision.” Each of the emails exchanged between Bloom and Stevens bore a “signature” (i.e., the typed name of the sender at the foot of the message). Stevens later commenced a breach of contract action against Publicis alleging that he was removed as CEO in violation of his employment agreement and that the New York Statute of Frauds and the terms of the employment agreement prevented Publicis from arguing that Stevens agreed to modify the terms of his employment agreement.
After a trial, the jury rendered a verdict in favor of Publicis on the breach of contract claim and Stevens appealed. In affirming the judgment below, New York’s Appellate Division, First Department, held that the emails exchanged by Bloom and Stevens satisfied the “signed writing” requirement of both Stevens’ employment agreement and New York’s Statute of Frauds, which was amended in 1994 to recognize electronic communications as “writings” and “any symbol executed or adopted by a party with the present intention to authenticate a writing [as a] ‘signing.’” Specifically, the court held that the relevant emails set out revised terms for Stevens’ employment in sufficient detail to constitute a binding modification to the agreement. The fact that the writing was never reduced to hard copy with handwritten signatures was irrelevant.
Stevens follows the trend in the law of recognizing that business is now conducted more by electronic means than ever before.1 Parties wishing to avoid the outcome in Stevens should consider including new language in their agreements addressing whether, by whom and to what extent such agreements may be modified by electronic communications. At a minimum, parties should be cognizant that email exchanges may produce binding agreements and that they must be careful when agreeing to terms in emails during contract negotiations.