Contract disputes may arise when one party didn’t even realize an enforceable contract existed. In Florida, some contracts must be in writing to be valid and enforceable.
Some oral contracts are also enforceable. However, evolving technology adds to the confusion regarding valid contracts. Many wonder whether agreements made over email or text message are legally binding. Consulting with an experienced business law attorney assists in answering complex questions related to contracts and contract validity.
Today, business is often done quickly and informally over emails, text messages, and other forms of electronic communication. This makes it much harder and much more important to understand when an enforceable contract has been formed.Florida Business Attorney Trevor Brewer
What Is a Contract?
A contract is a legally binding agreement between two or more parties to do something. Upon formation, a contract requires all parties to agree to perform their duties under the terms of the contract. Failure to perform constitutes a breach. The non-breaching party can sue the non-performing party to either enforce the agreement or obtain monetary damages.
Elements of a Contract
There are three essential elements of any valid contract: offer, acceptance, and consideration. Generally speaking, if these three elements exist, the contract is likely valid and enforceable.
An offer is a written or spoken statement by one individual to another. In other words, the offer expresses an intention to be bound by the terms upon acceptance by another. The Offeror is the person making the offer. The Offeree is the person bound to whom the offer is made.
Although it appears very straightforward, disputes arise between parties as to the existence of an actual offer. One party may believe they made an offer, whereas the other party believes it was just a discussion.
Within the statement itself, the presence of additional factors may indicate whether the statement is an offer. An offer made in jest is not considered valid. For example, a party stating they will sell their company for a $1 will likely not be serious. However, an offer expressing the willingness of the offering party to be held to the terms is valid. Additionally, a statement is more likely to be considered an offer if it is specific with definite terms and conditions.
The recipient of an offer must accept, if at all, while the offer is still open. Consider the example of an offer that provides, “I will pay you $1,200 for your car if you accept within four days.” If the receiver of the offer fails to accept within four days, the offer will no longer be valid. The receiver of the offer cannot accept the offer after seven days have passed.
A counter-offer is not an acceptance of the original offer. However, if the original Offeror accepts the terms of the counter-offer, that creates a valid contract.
Acceptance comes in many forms. Reasonableness is the more general standard for determining whether acceptance is valid. Additionally, the “mailbox rule” provides that written acceptance of an offer is valid once placed into the mailbox. For example, the Offeror submits an offer. The Offeree mails acceptance of the offer and puts it in the mailbox. After the Offeree places the acceptance in the mailbox, the Offeror withdraws the offer before receiving the acceptance. In this situation, pursuant to the mailbox rule, the Offeree can enforce the terms of the contract despite the Offeror’s attempted withdrawal.
Consideration is the third element of a valid contract. It is also referred to as “the benefit of the bargain.” Consideration is a legal concept describing something of value exchanged for something else. The presence of consideration distinguishes an offer from a gift. For example, if someone said, “I am going to give you this jacket for nothing,” this exchange would likely be a gift. By contrast, if someone said, “I will give you this jacket for $20, and the other party agreed to pay, this would constitute a valid contract. The exchange of something of value, here the jacket, for another thing of value, $20, fulfills the consideration requirement.
When Is a Contract Enforceable?
The presence of the elements mentioned above supports a valid argument for the existence of a contract. However, the form of a contract may affect its validity.
Is a Verbal Agreement Legally Binding?
A verbal contract is one formed in the absence of a writing.
In Florida, specific contracts must be in writing. If made verbally, they are unenforceable. Contracts required to be in writing are the following:
- Property transactions;
- Goods transactions with a value over $500;
- Marital settlement agreements and premarital agreements; and,
- Contracts with a completion date longer than 12 months.
However, verbal contracts that pertain to other types of agreements can be legally binding if they contain all the necessary elements of a contract.
Is an Email Agreement Legally Binding?
Today, the majority of communications are online. This fact leaves many wondering whether email communications can be considered a contract.
Florida has adopted the Uniform Electronic Transaction Action (UETA). The UETA provides that electronic communications are sufficient to satisfy any statute requiring a contract to be in writing. Therefore, an email is sufficient to form a contract as long as the required elements of a contract are present.
Additionally, in Florida, a binding contract can be found even without written signatures. Simply signing an email with your name is often sufficient. If a person uses contractual terms in the course of multiple email communications, a valid contract may be found.
You may avoid inadvertent contracts via email by stating that your negotiations are “subject to contract” and that you don’t intend the communications to be binding.
Are Text Messages Legally Binding?
Subject to the UETA, a contract can arise though any electronic medium, not just email communications. Therefore, although a chain of text messages may seem casual and, therefore, unenforceable, the UETA says otherwise. If a chain of text messages includes necessary contractual language, the text messages are legally binding.
It’s important to avoid inadvertent text message contracts that may become legally binding. Including the language “subject to contract,” the same as in all email communications, may clarify your intent.
Having an experienced business law attorney answer your questions and evaluate the facts of your contract dispute is imperative. Not all contracts are enforceable. When issues with contracts arise, BrewerLong’s attorneys work diligently to protect your business interests. Over the past decade, we have earned a reputation of delivering legal services and client experiences of the highest quality. Schedule an appointment with us today to learn more about how our legal team can help you.
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