Is an email a binding contract?

The short answer

• Emails can form contracts. The usual elements apply: a definite offer, an acceptance of those terms and something of value exchanged.
• Emails are writings. ESIGN and UETA say a contract can't be denied legal effect just because electronic records were used to form it.
• A typed name can be a signature, if it was typed with the intent to sign. An automatic signature block is weaker evidence.
• Intent to be bound matters. If both sides clearly expected to sign a formal contract later, an email exchange may be just negotiation.

What the law says about email

Under the federal ESIGN Act, a contract relating to a transaction in interstate commerce may not be denied legal effect, validity or enforceability solely because an electronic signature or electronic record was used in its formation (15 U.S.C. § 7001(a)(2)). UETA, the state law in every state but New York, says the same in section 7 and adds that an electronic record satisfies a law requiring a writing.

UETA's drafters illustrated it with two email exchanges. In the first, A emails an offer to buy widgets for delivery next Tuesday, signed "/s/ A", and B emails back an acceptance signed "/s/ B". The emails are valid records, but with no quantity stated, the deal still fails the UCC's writing rule for sales of goods. In the second, the offer is for 100 widgets at a stated price, and the same exchange satisfies that rule. The point: email doesn't weaken a contract or strengthen it. The ordinary rules decide whether the terms are complete enough.

Agreeing to do business by email

UETA applies only between parties who have each agreed to conduct the transaction electronically, and that agreement is judged from the context and the parties' conduct (section 5(b)). It doesn't need a formal contract. The drafters' comments give examples:

• Handing out a business card with a business email address may show willingness to deal electronically about that business, though not about unrelated matters.
• If two people at a meeting agree that one will send an email to confirm a deal, the agreement to use email exists.
• Someone with several addresses may be agreeing to use each one only for the purpose it serves, such as work email for work.

A person who agreed to email for one deal can refuse it for the next, and that right can't be waived by agreement (section 5(c)).

Is your email sign-off a signature?

Sometimes. Courts ask whether the sender typed their name intending to sign that message as an agreement. Two settlement cases decided under specific statutes show the range. A California appeals court refused to enforce a settlement where the defendant had replied to a proposal by email and typed his name, because nothing showed he meant the name as a signature or that the parties had agreed to transact electronically (J.B.B. Investment Partners v. Fair, 2014). A New York appeals court enforced a settlement emailed by an insurance claims adjuster over her typed name, finding she meant it as her signature (Forcelli v. Gelco Corp., 2013). More on this in is a typed name a legal signature.

How accidental contracts happen

• Replying "agreed" to a complete proposal. If the other side's email had the price, scope and dates, a one-word yes can close it.
• Accepting a quote by email. A customer who writes "Let's go ahead" to a detailed quote may have accepted it, terms and all, including terms you forgot were in it.
• Agreeing to the big points and leaving the rest. If enough is settled, a court may find a contract and fill gaps with ordinary rules you didn't choose.
• Someone else on your team replies. UETA's comments treat a name an authorized employee types on an email order as the business's own act. Who on your team can say yes matters.

Negotiating by email without agreeing by accident

1. Say what isn't binding. "Subject to a signed agreement" or "Not binding until both parties sign" is strong evidence you didn't intend the emails to be the contract.
2. Label drafts as drafts. Attach proposals marked draft, and avoid typing your full name under the word agreed until you mean it.
3. Say how acceptance happens. "To accept, sign the attached" tells the other side an email reply isn't enough.
4. Act consistently. Starting work or taking payment on the strength of an email can show you treated it as a deal, whatever the disclaimer said.
5. Decide who can commit. Tell your team who's authorized to agree to prices and terms by email.

When you want the deal to hold

If you do want to close by email, restate every term in one message and ask for an explicit acceptance with the person's full name. Better still, put the terms in a short document and send it for signature, so there's no argument about which email was the final version. With SignMaster, the signer gets an email with a private link, agrees to sign electronically, signs on any device, and both of you receive the signed PDF with its certificate of completion. See how to send a document for signature by email.