Going Paperless in the Land of Commercial Real Estate

Since the 17th century, the “statute of frauds” has required contracts or agreements for the sale or transfer of land to be in writing, signed by the party to be charged, and containing all essential terms. The intent of these requirements is to prevent fraud in the enforcement of contracts.

The key case involving the statute of fraud’s application that is commonly taught to first-year law students is Lucy v. Zehmer, a 1954 case decided by the Supreme Court of Virginia. The case involved two men (Lucy and Zehmer) who struck up a conversation about Lucy’s purchase of Zehmer’s land for $50,000. Following a verbal exchange that would later be characterized by Zehmer as merely a joke, their agreement was memorialized on the back of a cocktail napkin, which both parties signed on the proverbial dotted line. Litigation ensued over the enforceability of their agreement and the case eventually made its way to the Supreme Court of Virginia. In deciding whether the parties' so-called “napkin agreement” was a valid contract, the Court observed that it was in writing, signed by both parties, and stated the essential terms. Accordingly, the Court found the cocktail napkin to be a legally enforceable contract and entered an order forcing Zehmer to carry out the sale.

Whether an agreement satisfies the requirements of the statute of frauds has been a reoccurring issue in both Massachusetts and other jurisdictions and is routinely addressed by the courts. Yet the issue of whether an email message satisfies these requirements has remained virtually unanswered in Massachusetts jurisprudence – until now.

In K & K Development, Inc. v. Andrews, 2023 WL 5986501 (Sept. 15, 2023 Mass. App. Ct.), the Massachusetts Appeals Court considered whether an email exchange has the legal effect of satisfying the "writing" and “signature” requirements of the statute of frauds, to which it answered “yes”. In reaching this conclusion, the Appeals Court relied on the Legislature’s enactment of the Massachusetts Uniform Electronic Transactions Act (MUETA) in 2004, which put electronic signatures, contracts and other records on equal footing with traditional paper documents and, according to the Appeals Court in K&K Development, Inc. v. Andrews, “reflects the realities of how business is often conducted in today’s marketplace.”

In addition to finding that an email message exchange constitutes an electronic record within the meaning of the MUETA and, thus, has the legal effect of satisfying the “writing” requirement of the statute of frauds, the Appeals Court found that email messages also contained the necessary electronic signature, which the MUETA defines as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with intent to sign the record,” Because the emails originated from the sender’s email account, his signature appeared in the exchange, and he acknowledged at trial that he sent the messages. Based on these findings, the Appeals Court held that an email message can satisfy the requirements of the statute of frauds and, in that case, the email messages at issue did in fact form a legally binding contract.

Now that the Appeals Court has concluded that an email exchange is sufficient to satisfy the statute of frauds under Massachusetts law, parties should exercise care in their email communications related to offers to purchase and letters of intent, recognizing that failure to do may result in the parties being bound. To avoid any unintentional contract creation, parties should consider adding language along the following lines to their email transmissions of documents:

Please note that, the attached is a draft only for discussion purposes and until [name or role of party] has executed and delivered a [name of document], [name or role of party] shall not be bound by, and shall have the right to revoke, any offer that the transmittal of this attachment may constitute.