In today’s busy business environment, email isn’t just a tool for communication – it can also create legally binding obligations that may catch you off guard.
A quick message like “Sounds good, go ahead” might seem harmless, but if it meets key legal criteria, it could form a binding contract, with real consequences for your business. Knowing how and when contracts form over email is essential to avoid mistakes that could prove costly.
Our commercial law solicitors can help you tighten up your email processes, train your team, and put safeguards in place to prevent accidental agreements before they happen.
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Can an email form a legally binding contract?
Under English and Welsh law, contracts don’t always need a specific format to be enforceable - they can be verbal, written, or even formed through email. However, certain agreements, such as those involving land, must meet specific formalities to be enforceable.
For an email to create a legally binding contract, it needs to include:
- An offer
- Acceptance of that offer
- Consideration (something of value exchanged between the parties)
- Intention to create legal relations
- Certainty of terms
If all these elements are present, an email exchange could be legally binding - even if that wasn’t your intention.
Courts will examine the email chain if a dispute arises to determine whether a contract was formed. Even if you believed an email was just part of negotiations, it might still be deemed a legally binding agreement if it meets the key requirements. That’s why you and your team must be extra cautious when wording emails, especially when discussing deals.
What contractual risks do emails bring to your business?
Emails make business communications more efficient, but they also introduce legal risks:
- Unintended agreements: Depending on the context and the parties' intentions, a simple email like “Sounds good, go ahead” might be interpreted as accepting an offer.
- Missing legal protections: Unlike a formally drafted contract, an email agreement may lack crucial safeguards such as termination rights, liability limitations, or dispute resolution terms. Without these, your business could face serious risks.
- Losing track of agreements: If a crucial email gets deleted or misplaced, proving the agreed-upon legal terms can become challenging.
- Misinterpretation: Poorly worded emails can lead to confusion and disputes over what was agreed. Vague language may even create unintended or burdensome obligations.
- Unauthorised commitments: If an employee agrees to a contract without the proper authority, your business may still be held accountable. Even if they weren’t officially allowed to commit, the other party may assume they had the power to do so, potentially leading to legal disputes.
How can your business avoid email contract risks?
You can take several steps to minimise the risks of contracts being formed through email:
- Seek legal guidance before sending emails: Contract law is intricate, and many businesses overlook the potential legal consequences of email correspondence. Consulting a commercial solicitor beforehand is essential if there’s any doubt about whether an email might form a binding agreement. A commercial lawyer can asses your messages, identify possible risks, and ensure your business avoids unintended obligations.
- Implement a clear contract approval process: Define who within your business can enter into contracts via email. Without clear guidelines, employees may unknowingly commit the company to a legally binding agreement.
- Train your team on email contract risks: Ensure staff understand that certain statements in emails can be interpreted as accepting contractual terms. Without proper training, they might inadvertently create agreements.
- Use ‘subject to contract’ where necessary: Adding ‘subject to contract’ in emails indicates that discussions are ongoing and no final agreement has been reached. However, this is not a foolproof safeguard, as courts will consider the full context of an email exchange. If you are unsure how or when to use this phrase, seek legal advice.
- Clear your intentions in emails: If you don’t intend to accept specific terms or form a contract, explicitly state that in your emails. If discussions are ongoing, clarify that no binding agreement has been made.
- Use written contracts instead of email agreements: Where possible, formal written contracts should replace email arrangements. A professionally drafted contract provides much stronger legal protection. If an email contract is unavoidable, have a solicitor review the terms before committing.
- Keep proper records of email agreements: If a contract is agreed via email, ensure all relevant correspondence is securely stored. Losing key emails can create legal uncertainty and make it difficult to prove what was agreed.
For companies that frequently deal with contracts, a specialist in commercial agreements can evaluate your exposure to contractual risks.
Avoiding costly contract mistakes in emails
In today’s fast-paced digital world, even a short email can carry significant legal weight if the wording isn't precise or your staff aren't trained to spot the risks. Many businesses only realise the consequences after a dispute arises, but it may be too late by then. To stay ahead, you need to act before problems emerge.
Our commercial law solicitors work proactively with businesses to assess your contract management processes, review your team's communication, and implement clear protocols that reduce risk exposure. If you want to ensure your email communications support – not undermine – your commercial strategy, we’re here to help you do just that.
