INSIGHT: Email exchanges can result in a binding contract
In a recent court decision, the court considered whether two businesses had agreed to a change in their contract terms in email correspondence. The court found that they had - despite the existence of a contract clause stipulating that any changes must be in writing and signed.
The case is a useful warning to businesses with signed, written contracts that you can change the terms of written contracts inadvertently just by sending an email. The lack of a traditional signature in the email does not prevent the terms of the original contract being changed provided all the key elements of a contract are in place.
The court decision
In C&S Associates UK Ltd v Enterprise Insurance Company Plc., the claimant argued that a fee increase dealt with by email was valid and enforceable. The defendant disagreed and relied on a term of their contract that required all variations to be in writing and signed. On this basis, the defendant argued, the agreement by email did not amount to a signed, written contract.
The court, however, agreed with the claimant and concluded there was a contract: the key elements forming a contract were present (offer, acceptance, consideration and intention to be bound [link to the previous article]). Further, the standard email sign-off by the sender of the email was an effective signature in this case. The terms had been amended and the defendant was therefore bound to honour the increased fee agreement.
Treat email exchanges as potential contracts
Be aware that discussions you have by email could create contractual relations or lead to a change in your contract terms. Whether you are corresponding about a new contract or reviewing an existing contract, treat your email discussions with as much care as you would if you were face to face with the other party or writing a formal letter to them.
Know what you want
If you do not want to be contractually bound by your discussions – by email or otherwise, make this clear at the outset.
Tips for those negotiating changes to contracts
We recently wrote about a common misunderstanding that contracts must be in writing and signed to be legally binding (click here to read it). Binding changes to contract terms can also be made without being in writing or without a signed contract.
Our tips on negotiating contracts apply equally when you are discussing changes to your contracts. Click here to read them.
If you need advice on negotiating contracts or contract disputes, contact:
Christopher Burke on 0161 684 6941 or email email@example.com.
Also in this issue of Insight
- Are employment rules stifling British innovation?
- Email exchanges can result in a binding contract
- Making sure everything's "quite right" on a property transaction
- Employers Need To Plan Ahead For A Summer Of Sport
- Are Your Children Your Tenants? - Sign a Lease
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.