Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

The Perils of Text Message Contract Negotiations

Author: Dan Brecher

Date: July 15, 2015

Key Contacts

Back

With the explosion of smart phones, contract negotiation is no longer confined to business letters, telephone conversations, or even emails. However, are text message contract negotiations the way to go?

For busy business professionals, text message contract negotiations between partners is becoming increasingly common. Unfortunately, it is not the most legally sound way to negotiate a deal.

Many states, including New Jersey, have adopted the Uniform Electronic Transactions Act (“UETA”), which states that a “contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation” and that “[i]f a law requires a record to be in writing, an electronic record satisfies the law.” Courts have also relaxed the rules regarding when an email signature is sufficient to create a contract. However, courts are still determining how best to apply traditional contract law to emails, text messages, and other types of electronic communication.

In any case, the basic principles of contract law still apply. In order for a business contract to be enforceable, there must be a valid offer and acceptance, supported by consideration. If one party sends a text message or email proposing different terms, the offer is considered rejected, and the contract formation process starts fresh. In addition, the parties must also intend to be contractually bound. While intent need not be expressly conveyed in the electronic communication, it must be clear that the parties intended that the agreement be legally binding.

Tips for text message contract negotiations

To avoid a costly breach of contract lawsuit, below are five tips for text message contract negotiations, email or other form of electronic communication:

  • Expressly convey your intentions. The court will analyze what you said during text message contract negotiations, not your subjective intentions, when evaluating whether a valid contract has been formed. Therefore, it is imperative to memorialize everything in writing.  In New York, recent decisions indicate that the court is likely to view whether or not you put your name at the end of your message as an indicator of intent to form an agreement.
  • Put the other party on notice. If you do not want to be bound by the terms discussed via text or email, make it clear to the other party that your electronic correspondence should be considered non-binding, and that any agreement is contingent upon the execution of a physically executed, formal written contract.
  • Clear up any confusion. If you suspect that the other party may be interpreting your email exchange as the basis for a binding contract, it is imperative to take swift action, in writing, to correct any misconceptions.
  • Be mindful of accidental contract amendment. Texts and emails can also amend the terms of an existing agreement. Therefore, it is important to be equally mindful that you do not unknowingly waive or modify an important contract term via electronic correspondence.
  • Train your employees. Make sure your employees understand the risks of negotiating via electronic correspondence, including the unintentional formation of a binding agreement.

As a business owner do you find yourself making text message contract negotiations? If you feel you need to speak to an attorney regarding this issue contact attorney and editor of Business Law News Dan Brecher.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Understanding Chattel Paper: A Key Component in Secured Transactions post image

Understanding Chattel Paper: A Key Component in Secured Transactions

Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]

Author: Dan Brecher

Link to post with title - "Understanding Chattel Paper: A Key Component in Secured Transactions"
Crypto Compliance: A Comprehensive Guide post image

Crypto Compliance: A Comprehensive Guide

For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]

Author: Bryce S. Robins

Link to post with title - "Crypto Compliance: A Comprehensive Guide"
Supreme Court and Title VII: Implications for Reverse Discrimination post image

Supreme Court and Title VII: Implications for Reverse Discrimination

Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]

Author: Matthew F. Mimnaugh

Link to post with title - "Supreme Court and Title VII: Implications for Reverse Discrimination"
SPACs Are Back, What You Need to Know post image

SPACs Are Back, What You Need to Know

Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]

Author: Dan Brecher

Link to post with title - "SPACs Are Back, What You Need to Know"
Short Form Merger: Streamlining the Process for Businesses post image

Short Form Merger: Streamlining the Process for Businesses

Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]

Author: Dan Brecher

Link to post with title - "Short Form Merger: Streamlining the Process for Businesses"
Tariff Response Options for Small Businesses Facing Financial Distress post image

Tariff Response Options for Small Businesses Facing Financial Distress

The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]

Author: Brian D. Spector

Link to post with title - "Tariff Response Options for Small Businesses Facing Financial Distress"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!