Wednesday, August 24, 2011

Lets Tweet Up a Contract!


Attorneys routinely circulate contracts via email, fax, and in counterparts (pages signed by different clients at different times).   When we do, we tend to add paragraphs to the agreement allowing for “execution in counterparts” and “electronic transmission.”   Just to make it clear, this deal is going to stick!

We do these things because of a law called the “statute of frauds,” which requires contracts for the conveyance of real estate (among other things) to be in writing.  Apparently, in the olden days there was a brisk trade in verbal real estate deals, lots of spitty handshakes I’d imagine.  Shudder.

Of course, the inevitable question in today’s modern era is, what is a writing?  Is an email a writing?  A fax?  An IM?  A tweet?

In a noteworthy recent case, Naldi v. Grunberg, the court expressed its willingness to find an enforceable option contract in a series of emails between real estate brokers.  The court ultimately concluded that the emails in question failed to demonstrate that the parties had achieved a good old-fashioned “meeting of the minds,” since they weren’t yet on the same page about material terms such as price.

However, as to the contention that it was “just an email,” the court gleefully cited a long line of cases in support for the position that an email could meet the requirements of the statute of frauds, and bind all concerned.

To avoid this potential pitfall, my fellow real estate professionals, of all stripes, negotiating deals via email, text or tweet, might consider adding a standard disclaimer to their communications that the e-mail in question creates no binding obligations and advising the recipient of the need to memorialize whatever deal they think they might have struck in a signed written agreement.  Skip the spitty handshake.

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