A new New York State Appellate Division case drives home the point that our everyday exchanges of emails can constitute binding contracts, even for subject matter normally subject to the Statute of Frauds.

Stevens v. Publicis, S.A. et al., (2008 NY Slip Op 02880) involved a three-year employment contract, under which plaintiff’s duties were described as the “customary duties of a Chief Executive Officer.” Six months into the employment period, trouble arose and the plainitff CEO was given three options—leave the company; stay, but work only on new business not as a CEO; or come up with another bright idea for what to do with his time.

As is increasingly the case in modern business practice, the deposed CEO began an email exchange with his boss over the three options. After some time, the boss set out his understanding of the deal points the two had agreed upon—that the former CEO would stay on, but devote the vast majority of his time to new business development, with only 10% of his time to be spent on management and operations.

“Many business people are still unaware of the sweeping changes in contract creation brought about by electronic signatures.”

The plaintiff sent a reply email the next day saying, “I accept your proposal with total enthusiasm and excitement…” to which his boss replied the same day, “I am thrilled with your decision.”

And oh yes, each of the three emails bore the typed name of the sender at the foot of the message.

Under the Statute of Frauds, contracts to be performed in a period beyond one year must be evidenced by a “signed writing.” In addition, in this case, the plaintiff’s employment agreement itself required that any modifications be signed by all parties.

So, did the email exchange constitute a “signed writing?” Was it a modification “signed by all parties?”

Yes, on both counts according to the First Department.

Many business people are still unaware of the sweeping changes in contract creation that have been wrought by the 2000 Electronic Signatures in Global and National Commerce Act, 15 USCA Sec.70001 et seq. (the “ESign Act”) and recent case law interpreting the meaning of a signature. Essentially, under ESign, a signature or contract “may not be denied legal effect, validity or enforceability solely because it is in electronic form.” Further, even without citing ESign, another recent New York case held that a deal for the sale of real property (always subject to the Statute of Frauds) could be created and signed by the email sender’s “act of typing his name at the bottom of the email [which] manifested his intention to authenticate this transmission for Statute of Frauds purposes. “ Rosenfeld v. Zerneck, 4 Misc. 3d 193, 776 N.Y.S. 2d 458 (Sup. Ct. Kings Co., NY, May 4, 2004).

Stevens v. Publicis gives no clue as to whether the parties actually typed their own names at the bottom of each of their messages or if the names popped up as part of auto-signatures widely used on business emails. Either way, if the terms outlined in the email are specific enough to constitute a contract, the fact that the signature is electronic rather than hand signed will not preclude the formation of a contract. So, be careful what you automatically-e-sign!