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Binding Authority: How Texting May Have Transformed Offers and Real Estate Contracts

Teenagers can’t seem to exist without it. Many still struggle with its countless functions. Some probably wish it didn’t exist at all. No matter the view point, it is remarkable that over the course of 24 years, text messaging has become an inescapable and inseparable part of our lives. From their humble beginning in 1992, text messages are currently sent at an average rate of 350 billion per month globally. As such, it should come as no surprise that the process of text messaging affects various legal facets of day-to-day living. However, it may shock some to learn that the use of such a common tool can bind an individual to a purchase or sale of land and can constitute a satisfactory writing under the Statute of Frauds.

On April 14, 2016, in St. John’s Holdings, LLC v. Two Electronics, LLC, the Massachusetts Land Court denied the seller’s Special Motion to Dismiss, a motion filed due to the belief that emails regarding a letter of intent, in addition to a broker’s text message, was not enough to satisfy a written agreement under the Statute of Frauds. Rather, the seller claimed that these electronic communications solely represented ongoing negotiations between it and the buyer. In denying the seller’s motion, the Court held that the seller’s text and email correspondence with the buyer, concerning the sale of commercial property in Danvers, created a binding contract because the aforementioned group of messages included the essential terms of the agreement and was signed by the party upon whom the contract was to be enforced.

In regards to electronic signatures, the Court indicated that the typed broker’s name at the end of the text was sufficient to create a binding contract. In support of its holding, the Court cited prior case law, which established that, “A memorandum is signed in accordance with the Statute of Frauds if it is signed by the person to be charged, in his own name, or by his initials . . . or by a printed, stamped or typewritten signature.” Irving v. Goodimate Co., 70 N.E.2d 414, 417 (Mass. 1946). Here, the seller’s broker typed his name at the end of the relevant text, thereby satisfying the signature requirement within the Statute of Frauds. Additionally, although the emails and texts were not signed by the actual seller, since it was agreed upon that the broker would act on behalf of the seller, the broker’s signature and messages sufficed.

Furthermore, the Court quickly dismissed the notion that a contract must be formal in order to be enforceable. Acknowledging that text messaging is more informal than talks at the table, the Court clarifies that setting and method of delivery are irrelevant if the essential terms of the agreement are found within some form of a writing, be it electronic or otherwise. Since the accumulation of various texts and emails here outlined the essential terms, the Court held that such was sufficient, even though it was not formally drafted.

Although the enforceability of electronic messages as binding contracts is an ongoing legal battle, the ruling here cannot and should not be overlooked. With the evolution of technology and its place in the world of legal transactions, it is imperative that sellers and buyers exercise caution when exchanging something as simple as a group of text messages or other forms of electronic correspondence. If ignored, what should ordinarily be a true “meeting of the minds” could turn into a long-term battle over potentially binding authority.

Posted In: News, Real Estate