Is an email a legally binding contract?

Emails can definitely be considered legally binding, but for this to be the case, they need to meet the typical requirements of a contract.

There is an established legal precedent whereby emails have been deemed legally binding contracts, and the courts have ruled against companies who have tried to claim otherwise or back out of settlements.

So yes, while many of us might use emails to share funny GIFs and memes with our friends, in a business setting, they are taken much more seriously. 

In this article, we’ll teach you how to tell if your email is a legally binding contract, the rules to keep in mind, and a little more info about what a contract is in general. 

What is a binding contract?

A contract is defined as a legally binding document struck up between two or more parties.

Its purpose is to define and govern the rights, duties, and responsibilities of everyone involved in the agreement. (Jump over to our article on contract vs. agreement for the differences between these terms).

What qualifies a contract as legally binding?

If you’re wondering how to create a legally binding contract, the following contract elements must be satisfied:

• Offer and acceptance. All of the parties included in the exchange need to agree on the value of the item being exchanged. 
• Capacity. All parties agreeing to a contract must have the legal ability to do so. 
• Mutuality. Both sides should agree on the terms and conditions set within the contract.
• Legality. A contract that includes any promise to do or exchange something that violates the law will be invalid.
• Consideration/Agreement. In a legally binding contract, all of the parties will be receiving something. This benefit is called “consideration”. 

Can an email be used as a contract?

Is an email agreement legally binding?

Yes, it can be! It just needs to meet the usual requirements of a contract.

All electronic communications can constitute legally binding contracts. This even includes emails and text messages if written correctly. 

If you want to learn the difference between electronic contracts and traditional contracts, that’s a whole other kettle of fish, but needless to say, email agreements would fall under the former. 

Understanding email and contract law

Email is one of the most popular means of communication for businesses and their customers, which means that it can have legal significance when it comes to contractual relationships.

As a written document, emails can easily meet the legal requirement of a legally binding agreement.

Whether you’re negotiating for a lower internet price or discussing a refund, these written exchanges can form a binding contract. 

An issue, however, with relying on emails as contracts is that they can be incomplete, riddled with ambiguities, misunderstandings, or missing terms.

This can render emails unenforceable as agreements.

Parties would have to explicitly state that they agree or accept the terms.

You should keep a thorough record of the email correspondence in order to protect yourself in case someone breaches a contract that they deny having entered in the first place. 

How email can meet the criteria of a legal contract

First, an email is a written document, which means it can easily fulfill the need to present a written agreement in several jurisdictions.

It’s straightforward to share the content of the email to show that an offer was made by one party to another, as well as the terms and conditions outlined. 

Secondly, your email can prove that acceptance has occurred.

If the other party, or parties, reply to the email and express that they agree with the terms of the agreement, this can be considered as an acceptance of the offer. 

Third is a consideration, i.e., the exchange of things of value between the parties. This can be demonstrated through your email chain.

This would include information about the exchange of goods, services, money, or other things of value (provided they are legal).

And finally, you have intention. Intention refers to the willingness to form a legal agreement.

This can be demonstrated by the messages and language used in the emails you exchange.

By expressing an intent to be legally bound by an agreement, the parties make the contract more enforceable. 

So if you’re wondering, “Does a contract need to be signed by both parties?”, then the answer is yes – both parties need to be clearly on board. If one party is signing, both parties are signing.

Email contract restrictions that everyone needs to know

While emails can constitute legally binding contracts, there are some restrictions: 

Signatures matter sometimes

Some jurisdictions insist that some contracts should be established in writing and signed by everyone involved.

The formalities vary from place to place, so make sure to check what your local laws and regulations. 

Ambiguity

Like any informal method of communication, email exchanges can have misunderstandings, as well as ambiguous language that makes it harder to rely on them as contracts.

Without clear and specific language, you can end up with disputes or unenforceable agreements. 

Rules around electronic signatures

Check what the electronic signature laws are in your jurisdiction.

This will allow you to ensure that your email contracts are, in fact, contracts.

Security 

It’s easy for emails to get hacked.

If you want to discuss any sensitive or confidential information, ensure that all parties’ email servers are secure. 

Utilize PandaDoc’s contract templates for effective and efficient legal agreements

If you want to avoid a ton of hassle and stress, PandaDoc offers editable contract templates for almost every topic under the sun that you can download and use for your business and personal purposes.