If you’re discussing a deal in an electronic message simple statements, while harmless in intent, could cause serious problems. Courts in recent years have decided that in some cases an email exchange can constitute a binding contract. Since communicating via smartphones became ubiquitous, another question has arisen: whether you could enter into a contractual obligation – even inadvertently – by sending a text. A recent case in Massachusetts suggests that, too, is a possibility.
The court held that because the text message was “signed,” there could be an enforceable contract.
The Text That Launched a Lawsuit
The case in question, St. John’s Holdings v. Two Electronics, involved negotiations for the purchase of a commercial building. The buyer’s broker had emailed the seller’s broker an unsigned Letter of Intent (LOI) as an attachment. The LOI, which the parties intended to be binding, had to be signed by both parties. The seller’s broker followed up by texting the buyer’s broker to ask that the LOI be signed and that a deposit be made.
Specifically, the text said:
“Steve. [Seller] wants [buyer] to sign first, with a check, and then he will sign. Normally, the seller signs last or second. Not trying to be stupid or contrary, but that is the way it normally works. Can [buyer] sign today and get it to me today? Tim.”
The buyer then signed the LOI and provided a check to the seller. But on the same day, the seller accepted a third party’s offer for the property and refused to countersign the LOI. Rather than look for another property, the buyer decided to sue.