Back-and-forth negotiation emails can add up to a binding contract even without a signed final document, says UK court

The claim: Breach of contract. Damages sought: $54 million. The result: A UK court provisionally held that a binding contract suddenly material­ized when the last of a series of negotiation emails nailed down the parties’ agreement to the final essential point — this, even though the parties apparently never signed the anticipated hard-copy contract document.

Reference: Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd, [2011] EWHC 56 Comm) (denying motion to set aside order permitting service of process on guarantor), especially paragraphs 12-22 (negotiations by email), 25 (no signed final document), and 63-64 (analysis).

Hat tip: Raymond L. Sweigart & Steven P. Farmer at the Pillsbury law firm.

This result seems unremarkable as a matter of contract law. It might come as a surprise, however, to the many business people who think they can walk away from a negotiation at any time until they actually sign a document labeled “Agreement” (or some such).

Lesson learned: When negotiating a contract by email, consider including disclaimer language in your emails such as, for example: “Non-binding communication; [PARTY NAME] will be bound only by a signed, formal written agreement that expressly states that it is binding.“