Stanton P. Eigenbrodt, PLLC
Technology has radically changed the way we conduct business. In fact, as more and newer technology becomes available, we can easily forget to worry about some older technology – namely, email. It may seem a bit odd to refer to email as “old” technology, but it was invented in the 1970s and came into widespread use decades ago to the point now where it’s hard to imagine life without it. A great deal of business, including exchanging contracts and signatures, occurs over email.
Does the “E” in Email stand for “Enforceable Agreement”?
By Stan Eigenbrodt on April 21, 2019
In fact, programs like DocuSign or Adobe Sign enable businesses and individuals to digitally sign documents so that transactions can be completely electronic. While this ability to work electronically over email has certainly made it easier to conduct business, it has also caused unintended consequences. As a general counsel, I have presented numerous training courses on how to use (and not use) email, but one topic that does not seem to get enough attention is the fact that you can easily find you or your business unintentionally caught up in an enforceable agreement because of one or more emails that you sent.
The law caught up with the fact that a great deal of business is conducted electronically almost 20 years ago when Congress passed the E-SIGN act in 2000. That act essentially says that an electronic agreement or signature has the same effect as a paper document or a “wet” signature. Most states have adopted similar legislation, called the Uniform Electronic Transactions Act, including Texas, which has included the Uniform Electronic Transactions Act (the “TUETA”) in the Texas Business and Commerce Code. TUETA was enacted in 2001 and has been effective since 2002, so it’s also not a recent change.
If you’re wondering how broadly this legislation is interpreted, under the TUETA “electronic” means “relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.” The TUETA explains further in the Official Comment to the definition:
The term [“electronic”] must be construed broadly in light of developing technologies in order to fulfill the purpose of [TUETA] to validate commercial transactions regardless of the medium used by the parties. Current legal requirements for “writings” can be satisfied by almost any tangible media, whether paper, other fibers, or even stone. The purpose and applicability of this Act covers intangible media which are technologically capable of storing, transmitting and reproducing information in human perceivable form, but which lack the tangible aspect of paper, papyrus or stone. . . . This Act is intended to apply to all records and signatures created, used and stored by any medium which permits the information to be retrieved in perceivable form.
It is, of course, also comforting to know that if you need to resort to papyrus or stone you can still do so.
The TUETA goes on to state that contracts and signatures cannot be denied legal effect solely because they are electronic. In addition, the TUETA states that if a contract needs to be in writing, an electronic record satisfies that requirement. When you put all of these provisions together, it means that enforceable contracts can be created over email.
So, think about the next steps – if exchanging emails can create a contract, how do you know the parties intended to transact electronically, what do you need to have a contract, and how do you know what constitutes a “signature”?
Did You Intend to Conduct Business Electronically?
The TUETA states that “[w]hether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct.” Of course, if someone is trying to prove you have an enforceable email agreement, a court is probably reading your business emails to decide whether you were conducting business over email – as a result, it’s fairly easy for a court to decide you wanted to conduct business electronically.
One exception to this conclusion is a situation where one of the parties consistently states that they do not intend to conduct business over email, and that a paper agreement would be required before they would be obligated to anything.
Is there a Contract?
Whether or not there is enough detail in the email or emails for a court to find that there is an enforceable contract is governed by contract law – in other words, that fact the you are talking about emails rather than paper is irrelevant to the determination. The general rule in Texas is that multiple writings can be read together to form a contract. The Texas Supreme Court has held that “essential terms [of a contract] are those that parties would reasonably regard as ‘vitally important ingredient[s]’ of their bargain.” As an example, in a case to enforce a settlement agreement in an employment case, the ex-employee argued that the emails clearly indicated that no contract was formed because a term very important to the ex-employee regarding non-solicitation was still open. The court disagreed, holding that the essential elements of a settlement agreement were “payment and a release of claims,” and those terms were agreed to in a series of emails. The important point here is that while you may think a crucially important term of your “contract” has not been agreed to, if you leave it up to a court you might find yourself surprised and disappointed as the court is telling you about your enforceable agreement.
What is a Signature?
An “electronic signature” is “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” The official comment to the definition goes on to state that “[t]he idea of a signature is broad and not specifically defined. Whether any particular record is ‘signed’ is a question of fact. . . . No specific technology need be used in order to create a valid signature.”
While the Texas Supreme Court has not ruled on this issue, most Texas appeals courts and federal courts applying Texas law have taken a very broad view of what constitutes a “signature” in an email.
The easiest way for a court to find that you signed an email is if you manually typed your name at the end of the email. Courts, however, go a lot further to find a signature. Automated signature blocks work, and courts have even found that your name in the “From” line of the email is enough.
While one appeals court decision in Texas has disagreed that an automated signature block constitutes a signature, that appeals court decision has been criticized by other Texas appellate courts and federal district courts, and as a result it would be unwise to assume that a signature block would not be deemed a signature.
So what does this all mean? First, if you are negotiating a transaction over email, you need to be careful not to type statements like “I agree” or “We are in agreement” unless you really intend to be bound by that email. In addition, while you might think contracts require a signature, and you haven’t signed anything, if a court looks at the emails and wants to find that there is a contract, it can do so in multiple ways. If you typed your name at the bottom of the email, you have an automatically generated signature block, or even if your name appears in the “From” line of the email, a court can find you meant to sign the email. Depending on the signature requirement to keep you out of an enforceable email contract is not a good strategy.
One way to protect yourself would be to consistently state in the email that you do not intend to create a binding contract over email (or a series of emails), and that a separate definitive written agreement is required before there would be an enforceable agreement. While this strategy could work, even protective language might not work if you expressly agree to something in the email or emails in question. Remember, a court is going to look at the facts and circumstances in each case, and no one strategy will necessarily work all the time.
One of the best strategies is one I emphasize over and over again when I am doing training on the use of email, and that is THINK ABOUT WHAT YOU ARE WRITING. Read the email before you send it to make sure you have not agreed to something you did not intend. Even after being told multiple times people can tend to use email as if they are having a conversation, and that leads to sloppy emails that have unintended consequences, like finding yourself stuck in a contract you did not expect. Be careful out there, and don’t be that person!
 See Electronic Signatures in Global and National Commerce, 15 U.S.C. §§ 7001-7031 (2000).
 Id. at §7001(a).
 See Tex. Bus. & Com. Code Ann. §§ 322.001 – 322.021.
 Tex. Bus. & Com. Code Ann. § 322.002(5).
 Tex. Bus. And Com. Code § 322.002, at Official Comment No. 4 (emphasis added).
 Tex. Bus. And Com. Code § 322.007(a) and (b).
 Tex. Bus. And Com. Code § 322.007(c).
 Tex. Bus. And Com. Code § 322.005(b).
 See Celmer v. McGarry, 412 S.W.3d 691, 701 (Tex. App. – Dallas 2013, pet. denied) (in finding Celmer did not agree to transact electronically, the court noted that Celmer requested a writing rather than agreeing “to conduct transactions by electronic means”).
 See City of Houston v. Williams, 353 S.W.3d 128, 137 (Tex. 2011).
 Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 237 (Tex. 2016); see also Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978) (“there must be a written memorandum which is complete within itself in every material detail, and which contains all of the essential elements of the agreement, so that the contract can be ascertained from the writings without resorting to oral testimony”).
 See Keycorp v. Holland, Civ. Action No. 3:16-CV-1948-D (N.D. Tex. 2017).
 Tex. Bus. And Com. Code § 322.002(8).
 Id. at Official Comment 7.
 See, e.g., Khoury v. Tomlinson, 518 S.W.3d 568, 576-579 (Tex. App. – Houston [1st Dist.] 2017, no pet.) (noting that the TUETA was designed to “remove barriers to electronic transactions by setting an expansive view of what constitutes electronic records and signatures”); Williamson v. Bank of New York Mellon, et. al, 947 F. Supp.2d 704, 709-711 (N.D. Tex. 2013).
 See Cunningham v. Zurich American Insurance Co., 352 S.W.3d 519, 529-530 (Tex. App. – Forth Worth 2011, pet. denied).