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March 8, 2018

Technology and Contracts

Cynthia B. Brown

Contracts


Text Me The Details

In our world of ever increasing technology, as well as the demand of immediate access to information and people, it is no surprise that technology is changing the way contracts are formed.

Case in Point

In a recent case in Massachusetts, the Court concluded that a string of text messages could constitute a writing sufficient to bind the parties to sell certain property. The transaction involved numerous discussions and emails, including four drafts of a letter of intent from buyer to seller for purchase of the piece of property. None of the drafts of the letter were signed by buyer. Ultimately, the seller’s agent texted buyer’s agent asking him to sign the letter and provide a deposit. About two hours later, after the buyer signed the letter and provided a deposit, buyer’s agent sent a text to seller’s agent confirming the terms and eventually both parties signed.

What’s Enforceable?

The pivotal question is: what is required in South Carolina to form an enforceable contract? The general rule in most states is that contracts for the sale of land are enforceable only if they are supported by a writing that includes the essential terms and is signed by the party against whom enforcement is sought. This is called the Statute of Frauds. Thus, the legal questions for the Massachusetts courts was:

  • Whether a text message can be a writing under the Statute of Frauds,
  • Whether the alleged writing contained sufficiently complete terms and an intention to be bound by those terms,
  • Whether the text message is signed, and
  • Whether there is an offer and acceptance.

The court concluded that the text message from seller’s agent was a writing that when read in the context of the email exchanges between the parties contained sufficient terms to establish a binding contract between seller and buyer. In addition, the court found that the final text message contained a valid electronic signature to be “signed” within the meaning of the law. While this case deals with purchase of real property, there are many lessons for a modern construction project.

Application for a Modern Construction Project

First, emails facilitate rapid, almost instantaneous communication that in many cases analogize more closely to telephone calls or at least voice mail messages shot back and forth between parties whose chief goal is a prompt response. The judge noted that the emails reveal that the parties are really just talking with the help of the internet and not sitting down across a virtual table to electronically write up a memorandum of any contractual significance.

Second, claims succeed or fail based upon the documentation. Whether you are talking about formation of a contract, the validity of a change order or the supporting evidence for a delay claim, the documents are key to winning or losing. Your claim is a story and it must be told based upon the contemporaneous records on the project.

Third, despite all resistance, you must harness digital data, because more and more litigation and arbitration involve discovery of texts, emails and photographs for proving or defending a claim. Facebook has become a primary tool in picking a jury, as well as doing investigation of any witnesses and/or parties. All of these issues need to be considered as we continue at light speed in our technological practices.

If you have any questions about how technology is effecting your business from a legal standpoint, contact Harper, Lambert & Brown. Our attorneys will be happy to assist you.

 

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