Electronic Mail Discussions Do Not Always Constitute A Written Contract

Lawyers often warn business practitioners to be careful what they write as electronic mail can form a “signed” written contract.  However, that is not always the case.  A series of emails setting forth a generalized scope of work, time frame for completion, and payment schedule does not constitute a written contract, according the a recent decision from the Charlottesville Circuit Court.

In Goodenough v. Province, Case No. CL06-373, the Honorable Edward L. Hogshire granted a defendant’s plea and bar, and dismissed plaintiff’s contract claim with prejudice as untimely under the three-year limitations found in Virginia Code §8.01-246 and applicable to oral contracts.  Here, Plaintiff Goodenough hired Defendant Province to design a web site in 1999.  The parties exchanged a series of emails in which they agreed to compensation, basic design parameters, and a payment schedule.  Their electronic communications contained the following key statements:

  • Defendant’s initial confirming email states that “the project is too early in the planning stages to be detailed,” and that “these capabilities are not an exhaustive list and other might be integrated without raising the project cost estimate.”
  • A subsequent exchange set forth the payment schedule, and referred to an “outline specification for the web site…the design and content of which would also include items in our previous discussions and e-mails, and any other improvements that show up as work proceeds.”
  • The “outline of web site” document referred to states that the “following description is an outline only.  Certain functions already discussed or to be agreed upon are to be added.”
  • Months later, Defendant emailed Plaintiff referring to previous oral discussions regarding the project, identified a target completion date, and indicated that the project was 50% complete at that time.
  • Finally, Defendant sent Plaintiff an invoice requesting the final payment per the agreed schedule, which Plaintiff paid.

The web site was completed in 2002, at which point Plaintiff sent an email to Defendant indicating that the web site needed minor corrections but otherwise “[was] looking very good!”

Plaintiff filed suit for breach in 2006.  Defendant asserted a plea based on the statute of limitations.  In grating the plea, Judge Hogshire relied heavily onAmerican Indus. Corp. v. First & Merchants Nat’l Bank, 216 Va. 396 (1975) for the proposition that “though the Statute of Frauds does not require that the complete agreement between the parties show on the face of the signed writing, the nature and extent of the undertaking…must so appear or the agreement is not enforceable.”  Id. at 399.  Applying that rule, Judge Hogshire found that the email correspondence and supporting invoice and payment information does not constitute an agreement in writing signed by the parties.  Rather, such documents are “a collection of writings, some signed and some unsigned, which requires additional reference to oral communications to determine the ‘nature and extent of the undertaking.’”  Thus, the parties’ agreement is an oral contract subject to the three-year statute of limitations.  Plaintiff approved the web site and issued final payment in 2001, evidencing an “approval and acceptance of the web site project as agreed upon” more than three years prior to the claim filing.  The contract claims was thus time-barred.

Lawyers often instruct clients to be careful regarding written communications because of the ease with which an email containing a company signature block can constitute a “writing” for purposes of the statute of frauds.  This is sound advice.  But Judge Hogshire reminds practitioners and clients that the writing must be complete to satisfy the statute.  Clients who feel they have a written contract based on an email exchange are well advised to make sure that exchange includes all required contract terms.