Wednesday, March 22, 2006

E-mail Contracts [United States]

The 7th Circuit has held that a 572 word email did not constitute a legally binding contract in PFT Roberson, Inc. v. Volvo Trucks North America, Inc.,Download file

Volvo and Roberson were negotiating a complex fleet agreement. Volvo had sent an email captioned "confirmation of our conversation" that identified items that Volvo and Roberson had "come to agreement on", and others that the parties needed to "review and finalize".

Judge Easterbrook's opinion sensibly rejects the notion that "magic words" are necessary to avoid a binding agreement -- "the parties need not recite a formula to demonstrate that a definitive agreement lies in the future." The case was decided under Illinois law.

"If Roberson had hit the reply button in the email program and said only 'we accept,' no contract would have been formed because the email was not a definitive offer; it called for negotiation of the many open details rather than acceptance of any contract limited to a subset of the issues."
However this result came only after Roberson sued Volvo for breach of contract, as well as fraud based on Volvo's efforts to negotiate additional terms after sending the email. And only after Roberson had been awarded $5 million in damages after a jury trial. So do yourself (and your lawyers) a favor and watch those emails!

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