By Attorney Henry J. Lane
Lane Hamer, Whitinsville, MA
For the last 500 years or so, English common law and its progeny, including the laws of the Commonwealth of Massachusetts, have required that certain contracts be in writing and signed in order to be binding. Among the more important contracts that must be signed and in writing are contracts involving the purchase and sale of real estate.
The requirement for such contract to be in writing was clearly intended to insure that there was no misunderstanding concerning the terms and conditions of the agreement, particularly with regard to significant terms such as the purchase price. The requirement for a signature insured that both parties clearly understood that they had progressed beyond the negotiation stage and that they intended to be bound by the agreement.
With the advent of electronic communications, the traditional negotiating process has changed dramatically. Rather than negotiating in person or by written correspondence, negotiations are now often conducting entirely by electronic mail. Since electronic mail is still a "writing," the use of electronic mail does meet the requirement that a contract be in writing. The twist added by electronic mail is that, unlike the traditional practice where an agreement is typically reduced to a single written document signed by both parties, an agreement reached by electronic mail frequently requires reading a string of electronic mail exchanges in order to determine whether or not an agreement has been reached and what the terms and conditions of the agreement might be. Nevertheless, the courts have typically ruled that a series of email exchanges does meet the requirements for a written agreement.
The more problematic aspect of using electronic mail for real estate agreements is the requirement for a signature. Again, traditionally the signature requirement was satisfied by having each party physically place their script signature on the written document. In order to expedite commerce, many states, including Massachusetts, have adopted the Uniform Electronic Transactions Act which provides that the requirement for a signature can be satisfied with an electronic signature. Unfortunately, the Uniform Electronic Transactions Act does not clearly delineate what constitutes an electronic signature.
As defined by the Uniform Electronic Transactions Act, an electronic signature is "an electronic sound, symbol or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record." Since that definition is somewhat unclear, it has been left to the courts to determine what constitutes an electronic signature in practice. By definition, in order for an email signature to constitute a binding signature on a contract, one would have to place their name on the document with the intention of creating a contract. But how does one determine intent? In at least one Massachusetts case, a court has suggested that the standard "signature" block identifying the name and address of the sender of an email might be sufficient to constitute an electronic signature. However, since the use of email and electronic signatures is relatively new, few disputes concerning electronic signatures have made it through the appellate courts in Massachusetts and therefore, there is no definitive ruling on what constitutes an electronic signature in Massachusetts.
Under the circumstances, anyone negotiating a contract, particularly a purchase and sale agreement relating to real estate by electronic mail, may want to take the precaution of indicating on each email that the correspondence is only intended for the purpose of negotiation and that the identification of the sender is not intended as an electronic signature, until a final agreement including all material terms has been reached.