In last month’s Business Briefs, we discussed the Statute of Frauds, which requires that certain types of contracts must be in writing to be valid and enforceable.

What about an agreement reached solely by email communications? The answer, under California law, can be found in the Uniform Electronic Transactions Act, beginning at Civil Code §1633.1 (enacted in 1999).

The good news is that, subject to varied and numerous exceptions, parties who exchange emails indicating that both of them have the intention of forming a contract based dominantly on their respective emails will almost certainly be deemed to have formed a binding and enforceable contract. Here are some of the key components of the ACT:

• An “electronic signature” means an electronic sound, symbol or process attached to or logically associated with an electronic record (such as an email);
• The parties should be explicit. Example of what might be included in an email: “This communication is intended by the parties to be a binding agreement when all parties have intended and agreed to be bound by it”;
• A contract may not be defined legal effect solely because it is in electronic form, or solely because an electronic record was used in its formation;
• If the law requires a contract to be in writing, and/or to be signed by the parties, an electronic record and electronic signature are deemed to legally satisfy that requirement.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.

Your business lives or dies based on its contracts. With whom do you have business contracts?

• Employees
• Independent Contractors
• Suppliers
• Customers
• Advisors
• Landlord/Tenants
• Government at a wide variety of levels

And that’s only a partial list.

As an astute business owner, manager or entrepreneur (which is why you’re reading this newsletter! ), you know that it pays to understand “contract law” as a guide to your contractual relations with others.

Sure, if a contract is complex and involves a lot of legal issues, you’ll probably ask your lawyer to draft it for you. But whether you do that, or pick up a “standard form” you came across a few years ago, you should not unconditionally accept what you read or are told. As with many areas of business activity, your understanding of “what’s behind the curtain” can help you enter into appropriate, effective and enforceable contracts that help your business grow in a profitable and productive manner, and also often serve to limit exposure and potential liabilities associated with certain types of contracts.

So, from time to time we’re going to bring up various “contract issues” here in Business Briefs, to help increase your knowledge base and familiarity with contract law. We would also welcome your questions about “contract law”. If they’re of a general nature, and raise an issue that we think many of our readers might also find interesting to learn more about, we will attempt to answer them.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.