Verbal Agreement By Text
The first case that appears to have sparked a discussion about text messages within the legal community is St. John`s Holdings, LLC v. Two Electronics, LLC.  In this case, the seller provided the buyer with an SMS confirming that a Memorandum of Understanding was acceptable and requested the buyer`s signature, but as soon as the buyer signed, the seller refused to execute the latest declaration of intent.  The Massachusetts Court held that “text messages and emails may comply with the Fraud Act, provided that, like other writings, they contain the essential terms of the transaction and are signed by the parties or their authorized agents.”  The St. John`s Holdings Court found that these conditions were met. The text message implicitly contained the Memorandum of Understanding and took into account all the essential terms of the contract. The court then compared the text messages to the e-mail communication and found that the broker`s simple act, which inserted their first name at the end of the text message, was sufficient to qualify as a mandatory signature in these negotiations.  Text messages can also be used to negotiate and accept bilateral agreements.
Bilateral contracts accepted by SMS, as in writing, have an offer, consideration, contractual capacity and acceptance. In 2016, St. John`s Holdings, LLC vs. Two Electronics, LLC created the precedent for text messages as valid legal documents. To win the case, the aunt must prove with evidence that her nephew lent the money with the intention of repaying it, while the nephew must prove that he did not accept. Without the documentation of the agreement, it will be a matter of er-she-said. In the end, it is a judge who decides which case is most likely of the party. At Katz Law Group, we have helped many companies ensure that their texts do not unintentionally create contracts. We can adapt the language to your business, which will take you away from the contractual obligation and allow you to correspond freely without having to think twice about the impact of such communication. Call us at 508-480-8202.
For a verbal agreement to be binding, the elements of a valid contract must be present. To illustrate how the elements of a contract create binding conditions in an oral agreement, we use the example of a man who borrows $200 from his aunt to replace a flat tire. The immediate and informal nature of the text message has revolutionized the way people communicate over large and small distances. Indeed, text messages, as a form of digitized and traceable communication between two or more parties, are often addressed in disputes. But is a text message a legal document? If a company is concerned that its state will follow in the footsteps of Massachusetts, it would be wise to understand its state`s handling of e-mail correspondence in the case law, as well as terms such as the essential terms of an agreement and the Parol rule of evidence. It may even be possible to predict the most likely interpretation of text messages from state to state based on these predictive markers and the analogy with email communication.