Understanding Electronic Contracts

laptops_edited-1Today’s technology has impacted the way we negotiate, revise and revise contracts. The use of email makes the process much easier and quicker, but it can also lead to unexpected liability. There has been a drastic increase in the use of “electronic evidence” in litigation cases across the nation. In fact, many lawyers are using email conversations as evidence to prove that a binding contract was created between the parties.

The Uniform Electronic Transactions Act of 1999 provides that binding contracts can be formed by the use of electronic records. The basic requirements of a contract must still be met for it to be enforceable. To learn more about the basic requirements of a contract, please read our blog titled “Breach of Contract Basics.” If an email exchange demonstrates that there was an offer, acceptance, consideration and the intent of the parties to be legally bound, the court may find that an enforceable contract exists.

So, the question is, how do you safeguard yourself when negotiating an agreement via email? Here are a few tips:

  • State your intentions clearly and concisely. This may include a statement that your email is intended for negotiation purposes only and does not constitute an agreement until a formal agreement is signed by the parties. This statement should be included in every email.
  • Provide your employees with proper training regarding your company policies and procedures for electronic correspondence. You should consider requiring all employees to have their emails generate an automatic blanket disclaimer stating that they do not have the authority to bind the company.
  • If the other party indicates that it is relying upon the email conversation as creating a valid and enforceable contract, set the record straight immediately. The quicker you take action and clarify any misunderstanding or confusion, the better. You don’t want the party to rely on your email exchange and incur damages that could lead to litigation. Better to be safe than sorry!

If you have questions regarding electronic contracts or any other business-related matter, contact us to schedule an initial consultation.

 

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