Courts have frequently held that e-mail correspondence can qualify as an enforceable agreement, assuming the legal requirements for a valid offer and acceptance are met.  For example, in December 2006, the Michigan Court of Appeals held that parties in a lawsuit may enter into a settlement agreement via exchanges of email messages.  In so holding, the Court reviewed an email exchange as it would any other agreement; as long as there is an offer and an unambiguous acceptance of that offer, a contract is formed.  A valid contract also requires mutual assent or a “meeting of the minds” on all the essential terms.

In Kloian v. Domino’s Pizza LLC, 273 Mich. App. 449; 733 N.W.2d 766 (2006), counsel for the plaintiff Kloian sent an email to counsel for the defendant Domino’s Pizza stating that the plaintiff would “accept the payment of $48,000 in change [sic] for a dismissal with prejudice of all claims and a release as [sic] all possible claims.”  Defendant’s counsel responded, “Domino’s accepts your settlement offer contained in the message below,” and offered to draft a formal settlement agreement and dismissal.  The parties even amended their agreement via email correspondence to include additional terms.  The defendant later refused to sign the settlement agreement.  Domino’s sought to enforce it.

The court found that there was an offer, an unambiguous acceptance, and a “meeting of the minds” on the essential terms.  The defendant argued that settlement agreements, to be enforceable, are required to be in writing and signed by the parties.  The court, nevertheless, found that the agreement was in writing and further that the lawyers’ signature blocks constituted valid “electronic signatures.”  (Lawyers are assumed to have authority to settle lawsuits on behalf of their clients.)  The court enforced the parties’ settlement agreement.

THE BOTTOM LINE: contracts can be formed and amended via email — even contracts the law requires, or the parties require, to be in writing and signed by the parties.  Businesses should consider how they are using email when transacting business.  More importantly perhaps, businesses should review the provisions in their existing agreements and how they can be amended.  Where those agreements contain standard contract clauses requiring amendments to be in writing and signed, those provisions will need to specify that e-mails with signature blocks do not constitute a writing or written signature.

–Matt