Can Text Messages Create Legally Binding Contracts for Businesses?

Text messaging has become a common way for businesses to communicate with customers, vendors, employees and other companies. While a quick text may seem informal, businesses should be aware that messages exchanged during negotiations or transactions could potentially have legal consequences.

In some circumstances, a text message exchange can contribute to the formation of a legally binding contract. Electronic communications are generally recognized under state and federal laws. However, whether a particular text exchange creates an enforceable agreement depends on the circumstances and applicable law.

When Can a Text Message Become a Business Contract?

A business agreement generally requires several basic elements, including an offer, acceptance, consideration and an intent to create a legally binding agreement.

For example, suppose a business owner texts a vendor, “We will purchase 500 units at $20 each, with delivery by November 15.” If the vendor responds with a clear acceptance, the messages could become part of the evidence used to determine whether the parties reached an agreement.

The language and context of the messages are important. A text expressing interest or continuing negotiations is not necessarily the same as a final agreement. Courts may examine the entire communication between the parties to determine whether they reached a meeting of the minds.

Business Communications Can Create Unintended Obligations

One of the biggest concerns for businesses is that employees may make commitments through text without realizing that their communications could later become relevant to a contract dispute.

For example, an employee negotiating with a customer might text that the company will provide an additional service, extend a deadline or reduce a price. Whether that statement creates a contractual obligation can depend on the circumstances, the employee’s authority and the company’s policies, among other factors.

This creates potential risks when employees use personal phones or messaging apps to negotiate deals or modify existing agreements.

How Businesses Can Reduce the Risk of Text-Based Contract Disputes

Companies should establish clear policies governing business communications. They should consider:

• Using formal contracts for significant transactions. Important agreements should contain clearly defined terms rather than relying on a series of text messages.
• Establishing communication policies. Employees should understand when they can negotiate or make commitments through text and when they must obtain approval.
• Identifying employees with contracting authority. Employees should know who is authorized to enter into agreements or modify existing contracts on behalf of the company.
• Preserving relevant communications. Texts and other electronic messages related to contracts, negotiations and disputes may need to be retained.
• Confirming important discussions in writing. After reaching an agreement during a text conversation, businesses can document the final terms in a formal contract, email or other appropriate record.

Learn More About Business Contracts

Even when you are simplifying texting someone, what you say can be used against you in the form of a contract. Be mindful of what you text and ensure contracts are done formally.

Orlando business contracts lawyer B.F. Godfrey from Godfrey Legal can help protect your rights and accomplish your wishes. We offer sound counsel, guidance, and protection. To schedule a consultation, fill out the online form or call (407) 890-0023.

Source:

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