There is little in the real estate business - or any business for that matter - that is not handled by electronic communications.
Email exchanges are an effective and efficient manner to transact dealings with multiple parties. Most state legislatures have recognized the growing reliance on electronic communications in transacting business and have enacted statutes facilitating the incorporation of such messages into enforceable agreements. North Carolina is one of these states (North Carolina General Statute 66-311, et seq.).
North Carolina courts have also addressed the incorporation of electronic communications into binding contracts. In The Currituck Associates-Residential Partnership v Ray E. Hollowell, Jr., et al. (166 NC App 17 (2004), the Court of Appeals held that successive emails and other correspondence can create an enforceable agreement. In issuing its opinion, the Court reviewed several important points:
- The basic elements of a contract are an offer, an acceptance, and consideration. The Court, in this case, concluded that among the many emails and other communications “a valid offer was made and accepted in the correspondence between the parties;”
- Although laws may require that certain contracts be set out in writing, there is no requirement that “all provisions of a contract be set out in a single instrument.” Here, the Court reasoned that it is possible that a series of correspondence - like emails - constitutes the terms and conditions of an enforceable agreement; and
- The laws governing Agency can be complex, but once an agency relationship is established, the principal may be bound to agreed-upon terms. In this case, the Court confirmed that the acts and signature of an agent may commit the principal to contractual obligations. It is important to note that in this case, the agent was the attorney for the principal.
While the holding in the above case is likely limited to its very specific circumstances, perhaps it may serve as a cautionary notice regarding the numerous emails routinely sent out on behalf of clients – especially when such emails may be construed with statutes like NCGS 66-311 which seem to encourage the conducting of business by electronic means.
If the intent of an electronic message is merely to make a proposal or counter-proposal, the sender may be well advised to include a disclaimer stating such so as not to inadvertently create a binding agreement. It may be beneficial to consult an attorney who can provide you with proper language for your situation.
Published by John F. Renger on March 6, 2017