Published on: November 28, 2016
In today’s fast-paced world, we are all under pressure to get issues resolved more quickly, to close deals, and to move on to the next pressing matter. Technological advances make it possible to communicate instantaneously using a variety of means, including e-mail and text messages. As the use of these newer forms of communication become more common in the workplace, new issues arise, which require Massachusetts’ courts to utilize centuries-old standards to analyze the legalities of modern transactions.
In St. John’s Holdings, LLC v. Two Electronics, LLC, No. 16 000090 (RBF), 2016 WL 1460477 (Mass. Land Ct. April 14, 2016) (Foster, J.), Justice Foster of the Land Court was confronted with a novel issue – whether a text message can constitute a writing sufficient to create an enforceable contract for the sale of real estate. The issue implicates application of the Statute of Frauds, which provides that “[c]ontracts for the sale of land … are enforceable only if they are supported by a writing that includes the agreement’s essential terms and is signed by the party against whom enforcement is sought … .” Thus, the Court was confronted with whether a series of text messages and e-mails exchanged between two parties to a land sale transaction – the prospective buyer of a commercial building and its seller – constituted non-binding negotiations or whether these dealings were sufficiently detailed to create an enforceable contract for the sale of real estate.
Holding that the text messages were writings that, when “read in the context of exchanges between the parties, [contained] sufficient terms to state a binding contract,” Judge Foster analogized the texts to e-mails, which our courts have also recognized as sufficient to satisfy the Statute of Frauds. In the transaction at issue, the parties and their agents had discussed the terms of the buyer’s purchase of the commercial building over text messages, multiple telephone calls, e-mails, and face-to-face meetings. These discussions contemplated material terms of the transaction, such as the purchase price, financing, due diligence, and closing date. As all of the other requirements of the Statute of Frauds were also satisfied, the Court concluded that there was a binding agreement for the sale of the real estate, and the seller could not accept a second offer from a third party.
While the above-analysis certainly sounds “legal intensive,” its takeaway is not. The fact is that parties to transactions, such as those contemplating the purchase and sale of real estate, are increasingly communicating over a variety of technologies to get a deal closed – these technologies include e-mail and text messages, which have typically been viewed as more informal methods of communication. As demonstrated by Justice Foster’s decision and his discussion of case law therein, the courts are increasingly open to finding that these informal means of communicating can constitute writings and create binding and enforceable contracts. Accordingly, even when communicating via e-mail and text message, you should always bear in mind that any representations and promises made may later be enforced as binding obligations. While it is often tempting to provide a quick response to another party, you should pause prior to clicking send to ensure that the content of the message could not be construed as creating certain rights and/or obligations. If the message can be so read, then you should treat the electronic communications as you would any hard copy document and carefully consider exactly what you are agreeing to prior to hitting send. While taking this step may delay the transaction in the short term, it may also save you from unwanted woes and claims in the long run.
For a copy of the St. John’s Holdings, LLC v. Two Electronics, LLC Order [click here].
For any questions regarding this article, please contact Ed Allcock at firstname.lastname@example.org.