The instantaneous and informal nature of the text message has revolutionized the way people communicate across large and small distances. In fact, as a digitized and traceable form of communication between two or more parties, text messages are often brought up in legal disputes. But is a text message a legal document?
Can text messages replace both unilateral and bilateral contracts negotiated between one or more parties?
Under the E-Sign Act of 2000, contracts signed electronically are given the same weight as paper and ink contracts. This allows mediums such as e-signatures, clickwrap agreements, and text messages to function as unilateral contracts as long as there is a clear method of assent (checking a box, texting “I agree”, etc.) and actual notice (link to terms of service, text message contract document, etc.).
As long as these conditions are met, text messages and other forms of electronic communication are considered legally enforceable contracts in court. The E-Sign Act mainly applies to unilateral contracts that only require one party to accept the terms of the offeror. PactSafe’s text-to-sign feature is a clear example of this, as standardized contracts issued through PactSafe can be texted immediately to customers and clients for instant acceptance.
Text messages can also be used to negotiate and accept bilateral contracts. Bilateral contracts accepted over text message, like written ones, have an offer, consideration, capacity to contract, and acceptance. In 2016, St. John’s Holdings, LLC vs Two Electronics, LLC set the precedent for text messages being valid legal documents.
St. John’s Holdings was in the process of buying a Two Electronics property on in Danvers, MA, and received a text message from Two Electronics that contained a Letter of Intent (LOI). The text message stated the terms of the contract and included the names of the brokers who conducted the transaction. Per the instructions of the text message, St. John’s Holdings signed the LOI and cut the check to purchase the property. However, Two Electronics later sold the property to a third-party and refused to honor the check and letter of intent.
The Massachusetts Land Court ruled that the two documents in the text message and the LOI were enough to satisfy the writing requirement of the Statute of Frauds.
Because a real estate contract is required under state contract law to be written, the significance of this decision would determine that text messages are legally equivalent to bilateral contracts written on ink and paper.
This ruling states that as long as text messages satisfy the necessary conditions required of a bilateral contract in offer, consideration, capacity, and acceptance, they can be considered legally enforceable. The Massachusetts land court ruling also indicated that these contracts can replace written paper and ink contracts required by the Statute of Frauds which is enforced by many states.
Both the E-Sign Act and the case law analysis of St. John’s Holdings v. Two Electronics LLC make it clear that text messages can be used to send and accept unilateral and bilateral contracts. The term “subject to contract” should always be used when negotiating or refining a binding agreement over text message. This way, the intent to negotiate or change the offer is clearly understood.
Our team at PactSafe has recognized the issues regarding how text messages are used in court and also has understood the speed and efficiency in which one can communicate via text. PactSafe through its Text-to-Sign feature is able to deliver high-velocity contracts instantaneously to your cell phone or messaging platform with the necessary complete legal requirements and record-keeping for your peace of mind.