Grid Law founder David Walker explores the conditions that could turn an exchange of emails into a contractual agreement.
Can an email form a legally binding contract?
Yes, emails certainly can be legally binding. But whether they are or not, depends on their context and what is said within them. For contracts to be legally binding, five essential elements must be present:
- An offer
- Acceptance of the offer
- Consideration (i.e., some form of payment)
- An intention to be legally bound by the contract
- Certainty as to what the parties have agreed
In simple terms, two people must reach an agreement between them. So, one email on its own can’t be a legally binding contract. However, there’s no reason why an exchange of emails can’t contain all of these elements. Therefore, an exchange of emails can form a legally binding contract.
To explain this further, let’s say you’re involved in a payment dispute regarding a product you sold to a customer. The customer is making excuses and doing all they can to wriggle out of their obligation to pay you.
The first argument they may make is that there isn’t a legally binding contract between you. They say that all you had was an exchange of emails where they enquired about your products.
The trouble is, when two people exchange emails, their language tends to be more relaxed than when they’re preparing a formal contract. This can lead to ambiguity in what they say and important details could be missing. Because of this, there may not be sufficient certainty to form a contract.
To decide whether an exchange of emails forms a legally binding contract, you have to look very carefully at the words used.
An enquiry along the lines of “I’m interested in your product, can you send me some more details?” is not an offer.
Even a statement as specific as “I would like to buy your product” may not amount to an offer.
If you respond saying “Great, would you like it in red or blue?” this indicates there are still important details to agree.
It may then take several emails back and forth to clarify the offer, for it to be accepted and for all of the other details to be agreed.
Is a promise made in an email legally binding?
Next, the customer may argue that the product wasn’t what they were expecting so they shouldn’t have to pay for it.
During a sales pitch and negotiation, the customer will likely ask many different questions about the product. You will answer them and try to persuade the customer to make a purchase.
Your comments about the product will fall into one of three categories.
There will be:
- “Sales puffs”;
- Representations; and
- Statements of fact.
I explained what these three statements mean in a previous article: Are statements made during contract negotiations legally binding?
So, you need to look back through the emails to see exactly what was said and determine how much reliance your customer placed on that statement.
Again, the exact wording is very important.
If the customer asked a general question such as “Does your product do X?” and you replied “It should” this may be a representation.
Representations are not binding terms of the contract. However, if they induced your customer to make the purchase, they may have a claim for misrepresentation if it turned out to be untrue.
If your customer made a specific comment such as “I need your product to do X” and you replied “It does” this will be a statement of fact.
Statements of fact, such as these, are legally binding.
Are admissions made in an email legally binding?
Knowing that your customer is being difficult and just making excuses not to pay, you dig back through your emails. You find one in which they say how much they love their new product.
Can you use this email as evidence in court? Definitely.
If you’re involved in a legal dispute, all relevant documents can be used as evidence and this includes emails exchanged between the parties.
An email such as this, where your customer effectively admits that there are no problems with the product, could be all you need to win your claim against them.
The only time when you shouldn’t use emails as evidence is when they are “without prejudice”. “Without prejudice” effectively means that they are “off the record”.
Admissions made to help settle a dispute cannot be used as evidence during legal proceedings.
I explained more about the “without prejudice rule” in a previous article: Will trying to negotiate an early settlement of a dispute prejudice future legal action?
As we have seen, emails certainly can be legally binding. So, this leads to one final question.
Do you want emails to be legally binding?
Sometimes, for speed and convenience, you will want to form a contract via email. If you do, make sure that it’s absolutely clear what both parties have agreed.
If you don’t want to form a legally binding contract via email, you should make this explicitly clear. You should write “Subject to contract” in the header and be very careful about what you say.
Emails often have a disclaimer in their footer saying that an exchange of emails cannot form a legally binding contract. Other times they say that any offer made is subject to the sender’s standard terms and conditions.
These disclaimers are useful, but are not always fully effective.
Some email systems automatically cut the footers off emails, especially when there is a chain of emails going back and forth. If all five elements listed above are present, you could find you have entered into a legally binding contract without realising it.
This article was originally published on 25 February 2019.
If you have any questions about contracts or are involved in a business dispute and need some advice, please feel free to email me at email@example.com.
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