The Lawletter Vol 38 No 9
Emails and other electronic communications are changing certain time-honored precepts of contract formation. Attorneys should be aware that what used to be considered standard negotiating procedures may now result in a contract binding upon their clients.
This trend is illuminated in Forcelli v. Gelco Corp., 109 A.D.3d 244, ___ N.Y.S.2d ___ (2013), a recent decision issued by the New York Appellate Division. There, an insurance claims agent negotiated with opposing counsel the terms of the settlement of a personal injury suit. These negotiations were conducted almost exclusively by email. The claims agent sent an email to opposing counsel that confirmed that the parties had reached an agreement as to the terms and the amount of the settlement and asked opposing counsel to prepare a release and dismissal for the agent's review. The email was signed "Thanks Brenda Green." Id. at 246, ___ N.Y.S.2d at ___. In accordance with this email, the claimants signed a release.
In the meantime, the court entered summary judgment in favor of the insurance carrier and dismissed the complaint. The insurance carrier then attempted to rescind its offer of settlement. Toward this end, the carrier claimed that no binding settlement contract had been consummated between the parties. In response, the claimants moved the court to vacate its summary judgment order and to enforce the settlement between the parties on the ground that the agent's signed email message constituted a binding written settlement agreement.
The trial court granted the claimants' motion and ordered the insurance carrier to pay the amount of the settlement to the claimants. On appeal, the appellate division affirmed. In so doing, the court found that the agent's email message set forth the material terms of the agreement and, significantly, that the "settlement was not conditioned on any further occurrence, such as the outcome of the motion for summary judgment or the formal execution of the release and stipulation of dismissal" by the carrier. Id. at 248, ___ N.Y.S.2d at ___. In addition, the court found that the agent's typed name at the end of the email message was sufficient to constitute a signature that rendered the agreement binding. The signature line in question showed that the agent "purposefully added her name to this particular email message" and thereby manifested the intent that the name be treated as a signature. Id. at 251, ___ N.Y.S.2d at ___. Thus, the court concluded that the email message was a subscribed writing that constituted an enforceable contract.
Forcelli serves as a strong caution to attorneys against the practice of treating emails as merely inconsequential or too casual a form of communication to create a contract binding upon their clients. The days when courts required ink signatures to formal paper documents are over. Thus, it may be advisable for counsel to consider adopting some type of disclaimer in their emails in order to prevent a transmission from giving rise to a binding legal agreement.