What Constitutes a Legally Binding Contract?
A ‘legally binding’ agreement is one that is enforceable in a court of law. For an agreement to fall within this category, it must constitute a legal contract. Equally, for a legal contract to exist, there must be at least four essential elements: For an agreement to be legally binding, it is not enough that two (or more) parties merely express a willingness to enter into a contractual relationship. The agreement must contain the fundamental parameters of offer, consideration, acceptance and a shared intention to create legal relations. Consideration is a very important aspect of any contract. If it is missing, the agreement will generally not be classed as legally binding. Consideration involves the exchange of something in return for something else. It is important to note that consideration need not constitute ‘equal value’, however, if both parties exchange anything of value, it can be anything from money to a verbal promise . A great example of consideration is the next time you visit a Starbucks and purchase a latte. You give the barista $4.50, and they give you a latte. Without the exchange of something in return, you will not have a ‘legally binding’ agreement. Some contracts need to be in writing to be legally binding, however, many do not. Text messages and written emails can form a legal contract, but there is no ‘one-size-fits-all’ on when you should get everything in writing. A contract can be either written or spoken, and largely, if both parties agree upon a term, it embodies the elements listed above (offer, consideration, acceptance and shared intent) and is general in respect of any other requirements specified in statute, it is likely to be legally binding. This is true even if it is an oral agreement.
The Role of Digital Communication in Texas Law
With the advent of digital communication, there are more gray areas when it comes to the law. So considering the potential application of the messages to your case, you need to understand the nuances of these communications. In most cases, you want these communication forms to be treated as legally binding. For that to happen, the systems are not always the same when it comes to the perceptions of the legal framework within the Lone Star state.
Contracts are an interesting conversation generally, but particularly in this digital age of communication they become even more complex due to the ability to communicate almost anything via an impersonal medium. A transaction doesn’t involve met face-to-face anymore. The communication can be done on apps, text messages, email or other electronic forms and still form a contract. Since contracts are a part of many areas of law in Texas, having some understanding of their legal implications will help you make an informed decision for your case.
The Use of Text Messages as Evidence in Court
The admissibility of text messages in Texas courts for evidentiary purposes usually depends on the circumstances of how the text messages came to be sent. The primary test is whether the person who sent the text message drafted the text and/or intended for the message to be sent. An example of this is a situation whereby an individual drafts a text message by hand and then his text message app automatically comes up on his phone. In many cases, the ordinary rules of evidence apply to the admissibility of such evidence.
There is a growing body of recent case law in Texas where text messages were used by parties to establish the allegations they were making in their claims. A good example of this is Bell Partners, Inc. v. Donovan, where a landlord sued the previous tenants, who left without paying rent. 2019 WL 5268727 (Tex. App.—Dallas 2019, no pet.). In that case, the tenant texted her landlord on one occasion claiming her former roommate was removing her property and later claimed she needed assistance with regard to the changing of the locks. She also allegedly admitted in a text message that she departed without paying her final rent payment. The landlord sought to recover its final rent from her on the basis of this text message. The court also noted that the tenant sent a letter to the landlord after she quit performance under the lease in which she also sent the landlord a change of address and gave additional notice about the property.
After reviewing various precedents, the court noted, "However, if a party offers documents or objects into evidence as a mere act of self-identification or if the proponent lacks any connection with those documents or objects, the party may not be permitted to identify that item." The court further noted that digital media can be authenticated through circumstantial evidence. The tape of the City of Houston 911 call where the tenant asked the police to respond to her "husband’s" (her former roommate) action was also admitted. The police dispatch had a time stamp, and other police reports were also considered. The court noted that this tended to indicate more of a relationship between the parties, and the court could consider the tape of the 911 call in conjunction with the text messages in making its decision.
Also considered was the testimony of the landlord’s managing agent regarding how text messages were sent to her. The court further reasoned that circumstantial evidence was strongly probative to the authenticity of the text messages. The court remarked, "I also find that the text message from the Cell Phone that is in evidence was made and filed in the regular course of business by the landlord in that within a reasonable time after the trustee of the landlord’s telephone database . . . established that it was in fact ordinarily kept there in the regular course of business, and that a record was made at or near the time of the defendant’s use of that telephone."
The Bell Partners case demonstrates how recent case law tends to follow the same set of evidentiary rules for text messages as is followed with other pieces of evidence.
What Makes A Text Legally Binding?
At a minimum a legally binding text message would need to:
- Show that both parties intended to form a legally binding contract;
- Contain the terms of the deal that the parties have agreed upon; and
- Evidence acceptance of those terms such that there is no ambiguity about whether both parties agree or not.
For example, if Person A sends a text to Person B that says, "Want to buy my car for $5,000," and Person B responds with, "Sure, sounds good," then a legally binding transaction has occurred with respect to the sale of Person A’s car, assuming that Person B in fact wanted to buy Person A’s car, that Person A in fact intended to sell Person B his car, and also assuming that Persons A and B are old enough, smart enough and sober enough to enter into a contract of sale and that all of Person B’s uncles and cousins are legit (not authorities attempting to sting Person B into admitting to taking a bribe at work), and that Person A owns the car being sold and that it actually exists and that it is in fact in the picture included in the text sent by Person A.
More technically, an offer, acceptance, and consideration must exist for a legally binding contract to be formed. An offer means that one party has made an offer to another with specific terms – in this situation, the specific terms of the text exchange with the price of $5,000. Acceptance by the other party means that there has been a meeting of the minds and a knowing agreement about the specific terms of the offer. In other words, both people know what the offer is, and they both agree to the offer as is without further negotiations or additional terms. Next, consideration is the exchange of something of value. In this case, the sale price of $5,000 would be the consideration for the purchase of the vehicle. Consideration, of course, could take many forms including release from a prison sentence, but in the context of a text message agreement to sell a car for a certain price, the form of the consideration is money.
The easiest way to meet these elements of a legally binding contract via text message would be to simply text back and forth until you agree on the purchase and sale of your car, and then follow this up in a subsequent communication by email or regular mail confirming the following items: who is purchasing the property; who is selling the property; what specifically the property is; when the property is being sold; how much the sale price is and how the sale price is to be paid; and any other terms that were agreed upon in the text exchange in order to clarify the agreement in its entirety.
Potential Issues
While it may seem appealing to form a legally binding agreement through the simplicity of a text message, there are several challenges and considerations to keep in mind. One of the most significant challenges is the risk of ambiguity. Even if there is an apparent agreement reached via text, it may be difficult to prove the terms or subject matter of the agreement later on. This is particularly true if the subject matter of the agreement is complex. Parties who hire an attorney to draft an agreement often expect some degree of interpretation by the attorney; and, sometimes the attorney explains the meaning of certain terms or conditions in the agreement. That kind of background and context is not available for parties who attempt to form a legally binding agreement from a brief series of electronic messages.
Aside from clarity, there is also the issue of authentication. Authentication generally requires an original signature of the parties. A text message may be satisfactory if both parties sign the text message with the same device. However, if one party signs a text message and the other party signs on a different device, this could lead to authentication problems. In other words, if a party deletes the text message or if the service provider experiences technical issues, it may be difficult to verify that a text message was actually sent . Telephone numbers are also assigned to different devices over time. For instance, an individual may have changed phones or service providers. Therefore, a text message believed to be from your landlord may actually be from someone else.
The real estate business is built upon information exchange. Unfortunately, there is no guarantee that information sent or received through text messages can be verified in the future. In some jurisdictions, there is a legal basis to pursue a breach of contract lawsuit against a breaching party. The statute of frauds requires that certain types of contracts be in writing as an additional safeguard against ambiguity and authentication problems. In Texas, for instance, the statute of frauds requires certain contracts, such as those involving real estate, to be in signed writing and prohibits parties from suing each other over these kinds of contracts if the statute of frauds is not satisfied. It is unclear how a Judge or jury would enforce a contract formed through text messages, when most of the text messages are not in a signed writing; and, to the extent part of the contract is in writing, the signing requirements of the statute of frauds may be lacking.
How to Ensure a Text is Legally Binding
To increase the validity of your text messages in making binding agreements, consider the following:
Draft Carefully. Because text messages are sent and received so quickly, it can be easy to forget important terms or send a message before the text is complete. As in correspondence by other means, make sure that you say what you mean and mean what you say. If the terms are important, it is best to confirm in a more formal manner that you intend to be bound.
Confirm in Writing. In setting up an agreement by text, it is always a good practice to follow-up with a short written message confirming the material terms and/or including a link to an article spelling out the key issues. This way, there is less risk that one party misunderstood the terms of a binding agreement.
Seeking Professional Help When Closing Digital Contracts
Before attempting to use text messages to enter into a contractual agreement as described above, it is important to consult with a legal expert in the state accomplishing the agreement. In each part of the United States, there are various statutes that may prove or disprove the validity of a typed correspondence as a legally binding contract. The validity of an electronic contract or any other form of digital communication as an enforceable contract is generally a question of law that must be tried in a court of law . In most states, this question of law will be tried with expert testimony, including testimony from legal experts in the field of digital communications and digital contracts.
Legal experts can be used to try and prove or disprove the validity of a legally binding electronic contract. If you are considering entering into an electronic contract, it is important to consult with an experienced attorney. Your attorney may be able to provide you with an expert that can validate your electronic contract as a legally binding contract enforceable in the court of law. Having this expert verification is critical because it can save you significant amounts of time and money in court.