Life for most of the business world is moving at least at the speed of email. It was this way pre COVID-19 and is so especially now as many people hone in their remote work skills. Studies have shown that a majority of business people prefer to communicate via email. In 2019, it was estimated that over 293 billion business and consumer emails were sent and received per day.
An email message intentionally sent represents a person's thoughts, intentions and responses in written, recordable form - possibly surviving longer than some words "written in stone." In short, email is largely how business communication is accomplished. Naturally, we expect business deals made via email to be honored and enforceable. A recent case in Mississippi, however, highlights that a perceived offer and acceptance via email does not necessarily create an enforceable contract.
Background
In Parish Transport, LLC v. Jordan Carriers, Inc., 2020 WL 5089576 (Miss. Ct. App. Aug. 25, 2020)1, Jordan Carriers, Inc. (“Jordan”) had heavy haul equipment for sale, and Parish Transport, LLC (“Parish”) wanted to purchase the equipment. Discussions regarding the sale took place via email between representatives for the parties.
Jordan's representative offered to sell the equipment to Parish for $1.443 Million. Eight (8) days later, Parish's representative emailed a counteroffer of $1.25 Million. Parish's representative wrote, "Please let me know what you need from me[,] and we will get this deal closed and behind us both." Jordan's representative responded within about two and one-half (2.5) hours and expressed that he would have to talk to his partner about the counteroffer. He also stated, "I'm sure we will finalize today."
Parish's representative wrote back in approximately four (4) minutes, stating, "No rush just wanted you to have it in writing so you know that I am serious about this deal and my offer," and "We have [to] get this deal closed out pretty quickly once we pull the trigger." Within approximately one and one-half (1.5) hours, Jordan's representative wrote, "Ok. Let's do it. I need to get my people in touch with your people. Do you have a preference on how the money is spread out on the equipment?" Parish's representative responded, "Ok Great" and asked if he could breakdown the equipment for two different lenders. Jordan's representative said, "Yes," and to contact "Lynda" in Jordan's office to discuss.
A couple of days later, Parish's representative followed up saying that he had not been able to reach Lynda to discuss how to breakdown the purchase price of the equipment. Thereafter, Jordan's representative received an offer from another buyer to purchase the equipment at full price. Jordan's representative informed Parish's representative that a contract had been entered with another buyer but that "if something were to fall through you will be the first to know." Parish’s representative responded by saying Jordan and Parish already had a deal - an offer that Jordan's representative accepted - and that Parish had already entered into transportation agreements with customers for the use of the equipment. Parish advised that it would incur substantial losses if Jordan did not uphold the agreement.
Litigation ensued, and a lower court found that the emails between Jordan's and Parish's representatives did not constitute a valid, binding contract between the parties. Parish appealed the ruling.
The Appellate Court’s Review
On appeal, the primary issue before the Mississippi Court of Appeals was whether the email exchange between the parties formed a binding agreement. The Court's evaluation started with Mississippi's version of the Uniform Commercial Code concerning the sale of goods, specifically Mississippi Code Annotated § 75-2-201(1), which provides that a contract for the sale of goods over $500 is not enforceable unless there is some writing sufficient to indicate a contract has been made and that is signed by the party against whom enforcement is sought.
The Court next evaluated Mississippi's Uniform Electronic Transactions Act, Mississippi Code Annotated §§ 75-12-1, et seq. (“UETA”). The UETA was adopted in 2001 with the purpose of providing that an electronic record or signature satisfies the law when a record is required to be in writing2. The UETA only applies to transactions that parties have agreed to conduct via electronic means, which is to be determined by the surrounding circumstances and the parties' conduct. See Miss. Code Ann. § 75-12-9(b). An electronic signature is defined as "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign a record." See Miss. Code Ann. § 75-12-3(8).
In analyzing the email exchange between the parties and the provisions of the UETA, the Court stated that "[m]erely sending an email does not satisfy the signature requirement." The Court found that the email sent by Jordan's representative stating "Ok. Let's do it . . . " was not a signature and that an email stating "Sent from my iPhone" does not indicate an intent to sign the record under the UETA3. The Court also took into consideration the testimony of Jordan's representative given after litigation commenced that the response, "Ok. Let's do it . . .” meant "[l]et's get a deal done." The Court found that this testimony made the email ambiguous. The Court concluded that an enforceable contract did not exist without an electronic signature.
The Take-Away
While email is the business world's most common form of written, recordable communication, it does not always constitute an electronic signature sufficient to enforce a contract.
A party desiring to finalize an enforceable agreement via email, especially one involving the purchase or sale of goods, would be prudent to follow these steps:
1) Summarize and clarify the terms at the end. Email transactions generally involve multiple written exchanges, especially if any negotiation takes place. Once a deal is reached, summarize all the terms (offer, acceptance, consideration) in a final email and request that the other party confirm same (meeting of the minds). Not only can this eliminate the need to preserve various email strings, but it will provide an opportunity for all parties to clarify any aspect of the transaction that might otherwise have to be pieced together by multiple responses from different individuals. Concisely summarizing the terms can also make it apparent if something important is missing.
2) Establish the marks acting as signatures. This step can be as simple as asking the other party to confirm in writing that his or her typed name or initials at the bottom of an email is acting as a signature. Getting an affirmative response to this inquiry will alleviate any doubt about the intent.
Finally, some deals are just too important to base enforceability on an email exchange, regardless of how clear the exchange may seem. In this circumstance, parties should include appropriate disclaimers in their email exchanges indicating that a final agreement is conditional pending review and approval by others, the email discussions are only meant to be a draft, the execution of a more formal document is required, or by simply stating that a person does not intend to contract via email.
As transactions transition away from in-person exchanges to more electronic and remote deals, it is important for businesses to get the appropriate legal advice on structuring and finalizing their agreements to minimize the risk of an important transaction being the "deal that wasn't."
1 The opinion of the Mississippi Court of Appeals has not, to date, been released for publication in the permanent law reports. As a result, it remains subject to revision.
2 The UETA contains some notable exceptions to its applicability and provides, among other areas, that it does not apply to laws governing the formation of wills or testamentary trusts, or adoptions, divorces or other family law. See Miss. Code Ann. § 75-12-5(b).
3 The Court’s analysis noted that while certain emails sent by Jordan’s representative included his name at the end of the email, the email that Parish argued constituted an acceptance of the counter-offer did not have the representative’s name at the end of it.
