The “statute of frauds” in Massachusetts dates back to 1692 and requires a writing signed by the party to be charged for any legal action brought on certain contracts or agreements including those for the sale of land, for payment of the debt of another and for a contract that is not to be performed within a year.
The intent of the “statute of frauds” is to prevent fraud in the enforcement of a contract where there is no writing to support that it was made or to memorialize the terms of the agreement.
Since the 17th Century, the “statute of frauds” has generally remained unchanged with a multitude of cases interpreting the statute through the years. The most recent challenge to applying the four hundred year old law in the 21st Century is whether email can satisfy the statute’s requirement of a writing and signature.
All states now have laws that recognize electronic contracts and signatures. In 2004 Massachusetts adopted the “Uniform Electronic Transactions Act” intended to remove barriers to electronic commerce. The Act allows electronic versions of signatures, contracts and other records to be given the same effect as paper-based versions while preserving the substantive law of the state. As such, emails between parties that contain essential terms can satisfy the “statute of frauds” and create a binding contract. The enforceability of agreements reached by email is especially significant in the area of real estate transactions where deals can depend on the speed of communication and where the vast majority of agreements are negotiated via email.
However, in practice, many people still consider email to be an informal means of communication and this dichotomy, between the law and lingering perception, has led to several recent cases holding that anemail exchange formed a binding and enforceable agreement. In these cases the court looked to whether the parties intended to be bound at the time the emails were written, whether the emails contained the essential terms of an agreement and whether the emails referenced the necessity of subsequent action such as the execution of a more formal agreement.
Therefore, one way to avoid unwanted and unintended consequences of emails is to treat emails regarding business matters as you would historically more formal correspondence. Be cautious and explicit in each individual email communication, including whether or not you consider the email legally binding or whether you need to discuss the terms further or with another person. When using email keep in mind that although email is quick and easy, it is also a preferred communication of modern business and can be recognized as official and binding.