Don’t want to be sued for breach of contract? Watch that e-mail.

From the New York Times,

“BE careful when clicking “send.” That is essentially the message to brokers and their clients from a [New York] state court, which ruled recently in a real estate dispute that e-mails can carry the same weight as traditional ink-on-paper contracts.

“’Given the vast growth in the last decade and a half in the number of people and entities regularly using e-mail,” handwriting and e-mail should now basically be considered one and the same, according to the decision in Naldi v. Grunberg, which was handed down on Oct. 5 by the Appellate Division, First Department of State Supreme Court in Manhattan. The ruling, which attracted little public notice when it was announced, was appealed on Monday to the Court of Appeals, the state’s highest court.”

“’As much as communication originally written or typed on paper, an e-mail retrievable from computer storage” is proof of a deal, according to the court’s opinion, which was written by Associate Justice David Friedman.”

What’s this all about? It’s about a 300+ year old law called The Statute of Frauds. Every state has one and it basically requires that contracts involving real estate be in writing before they are deemed binding on the parties.

As you can imagine, e-mail wasn’t around in England when the first statute of frauds was developed. States are now recognizing that e-mail may be used to make some contracts binding and that’s what the appellate court did, “saying that if e-mail can be used for financial transactions like taking out business loans, it should be good enough for home purchases, too.”

“Though e-mail is hardly a new form of communication, uncertainty persists about how binding it is, which means the ruling in Naldi v. Grunberg could bring some clarity.”

“In most cases a disclaimer can inoculate senders from having e-mail backfire, real estate lawyers said. Mario J. Suarez, a lawyer at Thompson Hine who handles many commercial transactions, suggested that the wording might say the communications “shall not be deemed an offer, as no documents are binding unless and until executed.” Kirk Henckels, an executive vice president of Stribling, said he was under the impression that e-mails are “what we used to do over the phone,” and that property cannot truly change ownership until a paper document is signed by both parties. Mr. Henckels said the thinking was, “I can call this off unless I’ve received it back,” alluding to a signed contract.”

Read the full story.

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