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NY Court: E-Mail Alone Constitutes Valid Written Agreement


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6/2/2016
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I get asked this question an awful lot:

"Well, we didn't have a formal written agreement; all we have is a few back-and-forth e-mails, so I guess that means I have no case for breach of contract, right?"

Not necessarily; and certainly not in New York.

Consider this decision from New York's Appellate Division, First Department which held, in short, the answer is no; that fact alone does not necessarily mean that you automatically lose.

How E-Mail Alone Can Be Considered a Valid, Binding Written Agreement Under New York Law

To the contrary, in  Naldi v. Grunberg, the appellate court was confronted with a situation where the plaintiff sought to enforce his right of first refusal that he held for 30 days while he conducted due diligence in contemplation of buying the defendant's $50 million property.

In Naldi, the court stated as follows:

"We reject defendant's argument that an e-mail can never constitute a writing that satisfies the statute of frauds of GOL 5-703 ... Given the vast growth in the last decade and a half in the number of people and entities regularly using e-mail, we would conclude that the terms "writing" and "subscribed" in GOL 5-703 should now be construed to include, respectively, records of electronic communications and electronic signatures."

The Court further noted how New York State's adoption of ERSA affects its analysis, stating:

"In 1999, the New York Legislature enacted the Electronic Signatures and Records Act (ESRA), now article III (formerly article I) of the State Technology Law (L 1999, ch 4, § 2, as amended by L 2002, ch 314, and by L 2004, ch 437). ESRA does not specifically address whether an "electronic record" constitutes a writing for purposes of the statute of frauds. However, ESRA does provide, in pertinent part:

"In accordance with this section [directing the state Office for Technology to establish rules and regulations governing the use of electronic signatures and authentication] unless specifically provided otherwise by law, an electronic signature may be used by a person in lieu of a signature affixed by hand. The use of an electronic signature shall have the same validity and effect as the use of a signature affixed by hand" (ESRA § 304 [2]).
***
"New York's lawmakers appear to have chosen to incorporate the substantive terms of E-SIGN into New York state law. Thus, we conclude that E-SIGN's requirement that an electronically memorialized and subscribed contract be given the same legal effect as a contract memorialized and subscribed on paper (15 USC § 7001 [a]; see 12 Lawrence's Anderson on the Uniform Commercial Code, E-SIGN §§ 101:4, 101:6; Nimmer, Law of Computer Technology §§ 13:13, 13:15) is part of New York law,whether or not the transaction at issue is a matter "in or affecting interstate or foreign commerce."

The Takeaway

I have to give credit where credit is due. This decision is both well-reasoned and well-written.

And here's the best part: it acknowledges modern reality, and has taken a common sense approach to recognize what we already know from the real world - that e-mail has achieved recognition and acceptance as a perfectly valid form of written communication. This decision is also further proof that very little, at least in terms of a "formal" writing, is needed to be considered a "written agreement" under New York law. "

A Word of Caution

I would be remiss if I didn't mention this.

Ultimately, the strength - or weakness, as the case may be - of your breach of contract claim that is relying on an email to prove your case will rest on the same principles as a garden-variety breach of contract case. As a practical matter, this means that if the parties never really reached a "meeting of the minds" on the essential terms of the agreement, you won't have a viable breach of contract case - which, in point of fact, is precisely what happened in the Naldi matter.



Category: Breach of Contract

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