You know the old expression, variously attributed to Samuel Goldwyn and others, “ a verbal contract isn’t worth the paper it’s written on.” In fact, of course, unless the statute of frauds applies, an oral contract is as good as any other contract. And an email contract, under E-SIGN, the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. ch. 96, and UETA, the Uniform Electronic Transactions Act (applicable in every state except Illinois, New York and Washington), is, with some small exceptions for deeds, wills and the like, just as good as a written contract.
But not all writings form part of a contract, and neither do all emails.
A recent (unpublished) case out of New Jersey
involving the purchase and sale of seafood is illustrative.
Here is the base correspondence that, there seemed to be no question at all, made up the contract. A seafood supplier sent a “blast” email to buyers and brokers that it was taking pre-orders for a particular parcel of tuna product, including “a description of the tuna, its volume and prices.” A broker sent back the following email:
i will take it all
po 125151 thanks
dan
The supplier responded: “Done, thank you, Marc”.
The elements of a simple contract: offer, acceptance, consideration. They’re all there in remarkably clear language.
Now comes the complication. An additional email is sent.
thank you
please send me the pics when you have them taken at the freezer
thanks
dan
Now let’s play with this for a bit, before I tell you what really happened.
Imagine that the supplier did not send the requested pictures, and the tuna arrived and the buyer simply refused to pay for it, on the grounds that no pictures were sent. The question is, did the last email alter the contract in any way? And the answer is, no. All the essential elements of a contract were already formed and the provisions about the pictures was never agreed to by the seller. So the buyer would be obligated to buy the tuna anyway.
Imagine that the pictures were instead sent, but they showed tuna that did not meet the description that was in the offer. The buyer then rejected the tuna on the grounds of the pictures. Here we have an interesting question of the difference between the picture, which is evidence of the condition of the tuna, and the actual condition of the tuna. If the pictures were accurate, the buyer would be justified in rejecting the tuna because it did not conform to the description in the offer. That’s a basic ground for rejection under Section 2-602 of the UCC, “if the goods . . . fail in any respect to conform to the contract.” We call it the “perfect tender rule”. But that would apply whether there were pictures or not. If the tuna wasn’t as described, then the buyer could reject.
If for some reason the tuna was better than the pictures, the rejecting buyer would be at risk that the seller could prove that. That’s an unlikely, though not impossible, scenario. Note that there are variations within official grades for products like tuna. One could, reasonably, condition one’s acceptance on the pictures being acceptable, even if the tuna met a particular specification. But that wasn’t the parties’ contract.
Now let’s consider what really happened. The seller simply sold the tuna to someone else. The buyer had already re-sold the tuna in a back-to-back sale to yet another buyer, and was unable to perform that contract, where he had locked in a sure profit. The seller defended on the ground that, since it had never sent pictures, it had never been bound to the contract.
The court took this argument at face value. But it found that in order to prevail, the email would have had to have been sent at the initiation of the contract. So instead of saying “I will take it all,” it should have said, “I will take it all subject to pictures.”
This would have been the right result if the buyer had had remorse as I suggested in my examples before revealing what happened. If the buyer had made pictures a condition precedent to his purchase, and no pictures were forthcoming, then the buyer would have been excused from buying because the seller hadn’t fulfilled the required condition.
But that’s not what happened here. The condition, if it had been part of the contract, would have run in favor of the buyer, not the seller. Yet it was the seller who was trying to get out of the contract. The alleged contract, again assuming the pictures were part of it, was not “if you choose to provide me pictures and I am satisfied with them, I’ll buy”, it was “I’ll buy, but send me pictures first.” A condition precedent like this is an obligation of the seller for which the seller can be in breach by not complying, but it is not optional with the seller to fulfill the condition precedent, excusing him from performing the rest of the contract. It is a fundamental quality of a condition precedent that it can be waived by the party in whose favor it runs.
So even had the email been part of the contract, the seller’s failure to sell would not have been excused by the seller’s failure to provide the pictures. This email wouldn’t have been worth the paper it wasn’t written on no matter what happened.