≡ Menu

A client and its customer just “signed” a contract by having executives of each company do an “Agreed” Reply to All, in response to my email transmitting the final agreed contract as an attachment.

Step 1: The customer’s in-house lawyer and I agreed to a final draft of the contract. I saved the final draft as a PDF.

Step 2: With the prior concurrence of the customer’s in-house lawyer, I sent the following email to the pre-designated executives of each company; let’s call them “Alice” and “Bob.” Of course I copied the customer’s lawyer, “Carol,” as well as other relevant people involved in the negotiation.

Here’s the text of my email, lightly edited:

[Subject line: SIGNATURE REQUEST: [Contract name]]

ALICE and BOB: Per Carol’s email (below), please do a Reply to All with the text “Agreed” to confirm that [my client] and [customer] have agreed to the attached [contract], reflecting agreed revisions.

CAROL: As previously discussed by email, the attachment is a PDF of the redline that you sent on Sept. XX, with no other changes, and the redlines left in place so that [my client] can see the agreed variations from its standard agreement form.

Thanks,

[my signature block]

(Emphasis added.)

Step 3: Alice and Bob promptly emailed back “Agreed.” Under the law pretty much everywhere in the U.S. (see below), this created a binding contract — and the parties didn’t have to go to the trouble of wet-ink signature, nor did they have to use a document-signature service.

Pro tip: Note that in my email above, I specifically confirmed that I’d made no other changes to the draft that the customer’s lawyer and I had agreed on — this small professional courtesy helps speed up the signature process.

Concerning the enforceability of contracts-by-email, see generally, e.g.,  APB Realty, Inc. v. Georgia-Pacific LLC, 889 F.3d 26 (1st Cir. 2018) (vacating dismissal; complaint stated a claim for breach of contract formed by email);  Preston Law Firm v. Mariner Health Care Management, 622 F.3d 384 (5th Cir. 2010) (reversing district court; emails created binding compromise); J.D. Fields & Co., Inc. v. Shoring Engineers, 391 F. Supp. 3d 698, 703-04 (S.D. Tex. 2019) (denying motion to dismiss for lack of personal jurisdiction; emails (including one with a signed sale quotation) established a contract for sale of steel piping that incorporated general terms & conditions containing enforceable mandatory forum-selection clause); Kolchins v. Evolution Markets, Inc., 31 N.Y.3d 100, 107-08, 96 N.E.3d 784, 73 N.Y.S.3d 519, text accompanying n.5 (2018) (upholding denial of motion to dismiss a breach of contract claim because email exchange was sufficient); Newmark & Co. Real Estate Inc. v. 2615 E. 17 St. Realty LLC, 80 A.D.3d 476,  477-78, 914 N.Y.S.2d 162 (N.Y. App. 2011) (email agreement “constituted a meeting of the minds”).

U.S. law explicitly law supports the use of electronic signatures, which are becoming increasingly popular in business:

  • See generally the federal Electronic Signatures in Global and National Commerce Act (E-SIGN Act), 15 U.S.C. § 7001 et seq., which provides in part (subject to certain stated exceptions) that, for transactions “in or affecting interstate or foreign commerce,” electronic contracts and electronic signatures may not be denied legal effect solely because they are in electronic form.
  • At the U.S. state level, 47 states, the District of Columbia, and Puerto Rico, and the U.S. Virgin Islands have adopted the Uniform Electronic Transactions Act (UETA).
  • The remaining three states — Illinois, New York, and Washington — have adopted their own statutes validating electronic signatures.

Electronic signatures are now common in England and Wales as well. See generally Law Commission, Electronic Execution of Documents (2019), at https://perma.cc/UCQ7-U94M.

Caution: Under California law, a car dealer apparently must still obtain a manual contract signature from a car buyer. See Cal. Civ. Code § 1633.3(c) (various carve-outs from authorization of electronic signatures) and Cal. Veh. Code § 11736(a) (requiring signed agreement with car-buying consumer).

(The above citations are from a book manuscript in progress.)

{ 0 comments }

It can be risky to start work on a services project without having something in writing to nail down what will be done and how much is to be paid. Consider a California case about the Fast & Furious movies and a dispute about whether a producer was entitled to a percentage of the studio’s earnings. See Moritz v. Universal City Studios LLC, No. B299083, slip op. (Cal. App. Sept. 2, 2020) (affirming denial of defendant’s motion to compel arbitration in lieu of litigation).

Neal Moritz was a producer who worked for Universal Studios on the Fast & Furious series of movies. He and the studio entered into a series of written contracts with the studio that covered “sequels” and “remakes.”

Moritz started work on the Hobbs & Shaw movie, which was not a sequel nor a remake. (The parties agreed that this was the case.) Moritz did this without a finalized, signed written contract for the H&S movie, although the parties had exchanged written drafts. See id. at 5. The court recounted that:

… Moritz alleges that in connection with the Fast & Furious contracts, Moritz and Universal had fully negotiated and agreed upon an oral producer deal before any writings were exchanged, and that typically, Moritz would begin working on the production of the film prior to the oral producer deal being reduced to writing.

Moritz alleges that this again occurred with respect to Hobbs & Shaw, but this time, Universal failed to honor the terms of the parties’ oral agreement.

Id, slip op. at 6 (cleaned up, emphasis and extra paragraphing added).

Moritz sued for breach of the alleged oral contract. In response, the studio asked the court to transfer the case to private, confidential arbitration, based on the arbitration provisions in the written contracts for the “sequels” and “remakes.”

The district court and appeals court both held that arbitration was not required because the Hobbs & Shaw spinoff did not “relate to” the written contracts for the other F&F movies, so the arbitration clauses in those other contracts did not apply.

The court’s ruling means both parties will very likely have to take their chances in front of a jury (which in turn suggests that the case will likely be settled).

Drafting lesson: The parties likely could have avoided litigation altogether if they had signed even a very-short written contract. The court noted that for the Fast & Furious movies 8 through 10, the parties’ contract was less than two pages long because it simply adopted a previous written contract with limited modifications. See id., slip op. at 3.

{ 0 comments }

When drafting a contract (or other legal document), don’t count on the parties doing things like filling in blanks, because sometimes the parties simply don’t do what you expect. EXAMPLE: In a California case, “neither party to an arbitration agreement place[d] initials next to a jury waiver contained in the agreement, even though the drafter included lines for their initials[.]” Fortunately for the drafter of that agreement, the court held that “[o]n the facts of this case, we conclude the lack of initials is of no legal consequence.” Martinez v. BaronHR, Inc., No. B296858 (Cal. App. Jul. 8, 2020) (reversing denial of motion to compel arbitration; citing cases).

(But courts will not always bail out a drafter when parties don’t initial blank lines. See, e.g., Bruni v. Didion, 160 Cal. App. 4th 1272, 73 Cal. Rptr. 3d 395, 413 (2008) (affirming denial of motion to compel arbitration).)

Similarly, many lawyers have seen situations where contract forms included blanks for things such as the effective date — e.g., “This Agreement is made the ___ day of _____, 2020” — but the parties neglected to fill in the blanks when they signed.

Incidentally, as to the agreement-date issue, my preferred approach is this:

  • I draft the preamble to read as follows: “This Agreement is made effective the last date signed as written in the signature blocks.” (Emphasis added.)
  • In the signature blocks, I include, for each signer, a blank line for “Date signed” — not just “Date” — along with blanks for the signers to write their printed names and titles.

Signers are likely to hand-write the date signed when they sign the document, as long as the blank line for the date signed is right there with their signature lines. If the signers do hand-write the date signed, it takes care of the effective-date problem — and it also reduces the temptation to backdate signatures for deceptive purposes, which has sometimes resulted in business executives and counsel going to prison.

Caution: Sometimes it might be necessary to include things like blank lines for initialing. Example: UCC § 2-209 provides in part that: “(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.” (Emphasis added.)

Drafting lessons:

  1. Don’t count on parties’ filling in blanks or otherwise doing what you expect them to do. True, a court might bail you out, as happened in the Martinez case cited above — but your client might well have to incur the expense and burden of litigating the matter.
  2. Try to draft things so that what the parties do manage to do will be enough — as in the “Date signed” example above.
  3. Make it clear to the client, in writing, just what you’re expecting the parties to do. For example, in a draft contract, consider yellow-highlighting any blanks that need to be filled in. That will help to avoid unpleasant future conversations about whether you properly advised your client.
{ 0 comments }

Two Texas furniture dealers entered into an agreement — entirely by text message — for one party to sell the entire contents of a showroom to the other. The seller backed out; the court had no difficulty holding that the parties had entered into an enforceable contract. See Moe’s Home Collection, Inc. v. Davis Street Mercantile, LLC, No. 05-19-00595-CV, slip op. at 6-10 (Tex. App.—Dallas June 6, 2020) (affirming judgment below in relevant part).

(Hat tip: Prof. Eric Goldman.)

{ 0 comments }

Shall vs. will in the civil-rights era

I’m reading Robert Caro’s book Working, about his experience writing his magisterial multi-volume biography of Lyndon B. Johnson. This passage on page 165 caught my eye:

One [song of the 1960s] is a song that had been sung for a long time …. It’s “We Shall Overcome,” of course. …

… [D]uring the 1950s, it was taught at the Highlander Folk School in Tennessee, a school created to teach people how to organize in the labor unions, and to teach civil rights workers how to fight for their cause. The legendary folksinger Pete Seeger came to sing it there.

[Seeger] changed “We will overcome” to “We shall overcome.” That change shows the power of words. Changing a single word—changing “We will overcome” to “We shall overcome”—makes a big difference to the song.

Caro is right; I’d heard early versions of the song as We Will Overcome and thought that it didn’t have the same power as We Shall Overcome.

{ 0 comments }