Is A Text Message A Legal Document

The text message has changed the way people communicate across large and small distances. In fact, since it is a digitized and traceable form of communication between two or more parties, text messages are often brought up in legal disputes. But can text messages replace both unilateral and bilateral contracts negotiated between one or more parties? Is a text message a legal document? 

A text message can be a legal document under the ESIGN Act, which gives contracts signed electronically the same weight as paper and ink contracts. This allows acceptance methods like eSignatures, clickwrap agreements, and text messages to function as unilateral contracts as long as there is a clear method of assent (checking a box, texting “I agree,” etc.) and actual notice (link to a contract document in a text, on a checkout screen, etc). 

Generally, contracts that include an offer, consideration, capacity to contract, and acceptance, are deemed valid by the courts. This is the case for written contracts, digital legal documents, or agreements over text, email, or other forms of communication. As long as these conditions are met, text messages and other forms of electronic communication are considered legally enforceable contracts in court.

In 2016, St. John’s Holdings, LLC v. Two Electronics, LLC raised the question whether or not a text message is a valid legal document. 

St. John’s Holdings (SJH) approached the owner of Two Electronics with a proposal for purchasing a building owned by the latter. The two had agreed to work through their respective real estate brokers. But twice, SJH emailed over unsigned Letters of Intent (LOI), and did not incorporate the changes requested by the building’s owner. 

On Feb 3, 2016, the broker of Two Electronics, LLC then sent a text message to the buyers, SJH, saying the owner is interested in selling, but first the buyers must make the changes to the LOI, sign it, and include a check for the agreed amount. However, by the time SJH followed the terms outlined in the text message, Two Electronics had already sold the building to a third party buyer. They did not honor the LOI nor SJH’s check for purchase. 

The Massachusetts Land Court ruled that the text message and the LOI were enough to satisfy the writing requirement of the Statute of Frauds. Because a real estate contract is required under state contract law to be written, the significance of this decision would determine that text messages are legally equivalent to bilateral contracts written on ink and paper. A later ruling determined that the realtor who accepted the contract did not the authority to do so and therefore reversed the original ruling. But, the mutual exchange of details and intent to transact over text messages made the court consider the February 3 exchange a valid contract.

This ruling states that as long as text messages satisfy the necessary conditions required of a bilateral contract in offer, consideration, capacity, and acceptance, they can be considered legally enforceable. Even more, the courts determined that “an enforceable agreement requires (1) terms sufficiently complete and definite, and (2) a present intent of the parties at the time of formation to be bound by those terms.” 

Both the E-Sign Act and the case law analysis of St. John’s Holdings v. Two Electronics LLC make it clear that text messages can be used to send and accept unilateral and bilateral contracts. The term “subject to contract” should always be used when negotiating or refining a binding agreement over text message. This way, the intent to negotiate or change the offer is clearly understood. 

“The writing need not be a formal contract, but the terms of the writing must be sufficiently complete and definite and the writing must reflect a present intent of the parties at the time of formation to be bound,” the court said.

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