We have all heard stories about the dangers of social media, whether it be an inappropriate tweet, a regrettable Facebook posting or a misdirected “sexting.” The decision issued by the Massachusetts Land Court in St. John’s Holdings, LLC v. Two Electronics, LLC adds another peril to that list. It held that a text message sufficient to satisfy the signature requirement under the Statute of Frauds.
In December of 2015, SJH approached Two Electronics about leasing a building, and the parties’ discussions quickly segued into talk of a potential purchase and sale. By January, SJH sent Two Electronics the first in a trilogy of unsigned documents entitled “Binding Letter of Intent.” On February 2, the same day SJH sent its Final Letter of Intent, Two Electronics also received another offer to purchase the property from a third-party. On February 3, Two Electronics’ broker sent a text message to SJH’s broker, saying the following:
Steve. [Two Electronics] wants [SJH] to sign first, with a check, and then [Two Electronics] will sign. Normally, the seller signs last or second. Not trying to be stupid or contrary, but that is the way it normally works. Can [SJH] sign today and get it to me today? Tim
SJH’s Manager signed the Final Letter of Intent, as requested in the text, and the document, along with the requisite deposit, were delivered to Two Electronics’ broker later that day. Nevertheless, Two Electronics’ Manager decided to accept the third party’s offer and never countersigned the Final Letter of Intent.
SJH sued, claiming that it had a contract to buy the property that pre-dated any deal struck with the third-party, and Two Electronics moved to dismiss. Among the many arguments Two Electronics made was that the Statute of Frauds barred SJH’s claim because there was no writing signed by Two Electronics confirming any agreement. In a very interesting discussion about the evolution of the binding nature of electronic communications, the Land Court had this to say:
The way in which the parties handled the transaction was sufficient for them to appreciate that the text message would memorialize the contractual offer and acceptance. block quote
Further, as for the requirement under the Statute of Frauds that there be a writing signed by the party disputing an agreement, the Land Court held:
In the context of these exchanges between the parties, the court infers that the text message sent by Barry was intended to be authenticated by his deliberate choice to type his name at the conclusion of his text message. Unlike subsequent text messages of a more informal nature, where Barry did not choose to [type his name], the use of his [name] at the end of the February 2nd text message is evidence of his intent to have the writing be legally binding.
While this decision is not a binding precedent, the trend over the past several years plainly has been towards treating electronic communications more and more like documents signed in ink. Further, given the reality that people often send emails and, especially, texts, without taking the time to fully reflect on what they are saying, in-house counsel are well-advised to remind their business clients that hitting the send button on an email or text could be deemed to be the equivalent of signing a contract with a quill pen.