Email communication has long been common in the modern business world. However, with the Covid-19 pandemic sending more people to work from home, contracts and other business agreements are being formed across informal channels more than ever.
Contracts are legally formed once the following elements are met: there must be an offer and acceptance, the parties must intend to create the relationship, consideration must be exchanged, and the contract itself must be legal. Texas contract law is further governed by the statute of frauds, which requires that certain contracts – land sales, purchase of goods over $500 – be in writing, be written in an easily understood manner, and be written to spell out the essential terms. The burden lies on the plaintiff in a case to establish that a valid contract was in existence.
The Supreme Court of Texas recently issued a decision that clearly shows how the rules of contract formation and the statute of frauds are intertwined in establishing a valid contract. In Copano Energy, LLC v. Bujnoch, a series of emails were exchanged between Copano and a landowner’s legal representatives concerning purchase of a pipeline easement. Copano stated in an email that it agreed to pay a certain monetary value per foot of a proposed pipeline and discussed payment for damages to the property. The landowner’s attorney replied specifically “we accept your offer” and gave authorization to begin a survey. However, the pipeline was never built, and the landowner sued for breach of contract. The Court held that although there was clearly an offer and acceptance, the statue of frauds was not satisfied, because essential terms were not stated, such as the easement’s location and size.
In Chalker Energy Partners III, LLC v. Le Norman Operating LLC the Court further clarified that although emails are clearly “writings” as intended by the statute of frauds, an exchange of emails does not necessarily evidence that parties have reached a meeting of the minds to form a definitive agreement.
It appears that the takeaway from these recent developments in digital contract formation is specificity above all else. Emails are obviously considered writings in terms of the statute of frauds, but in order for a party to clearly establish that an exchange of emails has established a valid, enforceable contract, the elements of offer, acceptance, and essential terms must be particularly spelled out.
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