Texts as Binding Contracts

Text Messages Can Become Binding Agreements.

By Benjamin P. Michaelson

To text, or not to text, that is the question. Well, maybe that is not THE question, THE question should really be, do you mean it? If the text is in the context of an agreement with another person you better, especially if you live in Massachusetts. As texting is emerging outside of personal and into business communications, courts are starting to hear cases about the significance of texts between two parties, and whether or not a binding contract is created by text. Save everyone a lot of trouble, and just assume that they do.

In  St. John’s Holdings, LLC v. Two Electronics, LLC the Massachusetts Land Court recently ruled that text messages between two real estate brokers regarding the purchase and sale of a multi-million commercial building may constitute a “writing” sufficient to create a binding contract.

After the buyer and seller discussed the sale of the building with each other a letter of intent (“LOI”) was drafted. That LOI was negotiated and revised between the parties by their brokers, including through a series of text messages. In one of texts, the seller’s broker indicated that the seller wanted the buyer to sign the LOI. The buyer’s broker then texted the seller’s broker that the LOI was signed and the earnest money check was in his hands. The seller then entered into a sale agreement with a different buyer and the original buyer sued to enforce its rights as a buyer of the building under a binding letter of intent to purchase, relying upon the series of text messages. The court found that the party’s actions clearly evidenced an understanding that the text messages would create a binding LOI as an offer and acceptance, and that the typed signatures at the end of the texts sufficiently established a signature.

Practically speaking when sending a text (or a letter, or an email, or when shaking someone’s hand in agreement, etc.) make sure you mean what you say and say what you mean, as the statement can binding upon you.