When is an email, just an email?
It is no secret the law has trouble keeping up with technology. Although emails have become a mainstay of business communications, the law is struggling to apply traditional contract law to the now standard method of communication. Although email facilitates communications in a much less formal manner, the suggestion that “it was just an email” does not cut it in the business world. Previously, we have discussed email disclaimers (here and here). Today, we are going to talk about being proactive during the initial contract stage.
The importance of being careful with email communication is exemplified by a recent case out of the State of New York. Two parties had an employment contract with a standard provision stating all changes to the agreement had to be made in writing and had to be signed by both parties. The CEO of the company was removed and initially was given the option of leaving or accepting a demotion. The new CEO and the former CEO communicated several times via email discussing various proposals on continued employment of the former CEO different from the initial two choices. The new CEO wrote in an email: “This option, it would seem, is in your best interest because it offers the best opportunity for you to achieve your stated goal…” The former CEO responded the following day: “I accept your proposal with total enthusiasm and excitement…” The new CEO then replied that day: “I am thrilled with your decision. You have my personal assurance that all of us will continue to work in the spirit of partnership…”
The former CEO also sent an email to the COO stating his acceptance of the proposal. The terms of the new status were never confirmed or signed in a separate and distinct document. The former CEO filed suit seeking to enforce the email agreement. The court determined the emails constituted signed writings sufficient to modify the employment contract. Specifically, the court determined the inclusion of the author’s name at the end of their emails “signified [their] intent to authenticate the contents.”
Be proactive in the initial contract
As more and more courts move in this direction, companies can protect themselves by proactively limiting the damage that could be caused by a casual email when it comes to amending or changing detailed contracts. In addition to the standard language that all amendments to the contract must be signed in writing to be effective, you can add a simple sentence that prohibits any modifications by email or other electronic communications.