Jun 22, 2016

Akorede Omotayo - Binding a contract by Text Message?

photo - irishtimes.com 

Binding a contract by Text Message? New Traps for Deal – Makers in Commercial Negotiations.

With the prevalence of email and text messaging in today’s business world, multi-billion dollar deals can be signed up without the parties even sitting down together. As Frank Aquila and Sarah Payne of Sullivan & Cromwell LLP submits, Business negotiations, and especially commercial deals, between lawyers and businesspeople alike occur over emails, often with shorthand, with words that may not be chosen with the same degree of thought and care as the words that are “written” in the actual transaction document.


However, in a recent United States decision by the Massachusetts Land Court, considered by many as a landmark, text messages between two real estate brokers regarding the purchase and sale of a commercial building was held to be capable of constituting an acceptance to an offer.

Facts of the case
In this case, St. John’s Holdings, LLC v. Two Electronics LLC, the plaintiff, St. John’s Holding (SJH), and the defendant (Two Electronics) had negotiated for the sale of a commercial building worth $3.232 million. Both parties were represented by commercial real estate brokers and had negotiated in person and via email and text messages, during the course of which both parties had agreed to reduce the terms of the agreement to a letter of intent (LOI).

Subsequently, the seller’s broker sent the buyer’s agent a text message asking that the buyer sign the final LOI and submit a deposit check, which the buyer later did. Each of the text at issue concluded with the sender’s name. However, rather than execute its end of the LOI, the seller’s agent accepted a third party’s offer to buy the building. The jilted buyer sued to enforce its rights as a buyer of the building under a binding letter of intent to purchase.

It was the defendants case that no contract was formed because Two Electronics did not accept the offer to purchase and the communication between the parties about the sale of the property did not satisfy the condition in the Massachusetts’s Statute of Fraud that an acceptance will not be binding except it is in a written form.

Court's Judgement
However, even though the Seller did not physically sign the LOI, the Court found that the text messages, taken in context, constituted an acceptance to make the contract binding. Further, the Court found that the typed signature at the end of the text was sufficient to authenticate the identity of the sender.
In other words, as O’Connor reiterates, the court noted that “[t]he communications between SJH and Two Electronics before the text message evidenced a meticulous attention to provisions that would govern the agreement to purchase the [building].” When read in context of the exchanges between the parties, the court concluded that the text messages at issue constituted a binding offer and acceptance.

Concluding remarks
Of course this case is just a persuasive precedent, it’s importance to contractual dealings in Nigeria is a little more than obvious. Contracting parties and brokers should be aware that making commercial deals via emails and text messages is gradually becoming a dangerous minefield.

Brokers need to take precautions to qualify their language in all electronic communications and warn their clients to use the following disclaimers when negotiating deals: “Emails and text messages sent or received shall neither constitute acceptance of conducting transactions via electronic means nor shall create a binding contract in the absence of a fully signed written agreement.

It is the opinion of this writer that a new level of precaution is required when engaging in such instantaneous and often seemingly informal commercial negotiations.

Akorede Omotayo 


Share:

1 comment:

  1. Dear sir/mam,

    Tired of handing your hard earned money over to contractors for your home improvement projects? This time do it yourself and save some money!
    see more at : excavation massachusetts

    Thank you for read my comment.

    Regards
    sathiaja

    ReplyDelete

Blog Archive

AELEX Annual Lecture

AELEX Annual Lecture
AELEX Annual Lecture

ORDER NOW

The Nigerian blawg

Disclaimer:- Posts and comments by the publishers of this blog do not constitute legal advice or create an attorney-client relationship.

Follow by Email

Advertise your property

Property Listings

  • SALE-4bedroom duplex With 3 living rooms. Located at Opic Harmony Estate. Asking 80m Title Global C of O/ consent in progress. 08055424566
  • FOR SALE 8bedroom duplex 2 living rooms With 2 rooms BQ N150m Located off CMD Road Magodo Registered Title Contact 08055424566
  • Property for Rent – New Building, 4 unit luxury 2 bedroom flat available at Rafiu Ipaye Street, Ijesha, Surulere. Ground floor back flat- 700k per anum, First floor back flat – 750k per anum, 2nd floor back flat – 750k, 2nd floor front flat – 800k. Service charge - 75k per anum. Refundable caution – 70k. Call 08055424566 for details.
  • Property For Sale!!! A fenced and gated uncompleted 3 bedroom site on a full plot of land is available for sale at Igbetu via Awoyaya, behind Mayfair Gardepn Estate, Ibeju-Lekki, Lagos for sale. Price is N20million and Title Documents include, Family Receipt,  Deed of Assignment and Global C of O. Contact 08055424566 for more information
  • PROPERTY FOR SALE!!!!!!!!  A 5 Bedroom Duplex with 2 room BQ formerly used for a Nursery & Primary school is available for sale in Iyana Ipaja, Lagos  Building contains 9 CLASSROOMS, 2 OFFICE SPACES, 1 LARGE RECEPTION, 8 TOILETS, 5 BATHROOMS, KITCHEN,PLAY AREA. The seller's title is a certificate of Occupancy and the asking price is 35 million Naira.  Contact 08055424566 for more details 
  • List your property for rent or sale here

CONTACT US

Name

Email *

Message *

Powered by Blogger.