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An e-mail exchange can accidentally create a binding contract

A series of back-and-forth e-mails in which two people agree on the terms of a deal could amount to a binding legal contract, even though no formal, “official” contract was ever drawn up or signed.

That’s the word from a federal appeals court in Atlanta.

Author Rafael Vergara sued the Coca-Cola company, claiming that he had a copyright in the Spanish lyrics that were used in Coke’s advertising during the World Cup soccer tournament. At some point, Vergara had exchanged e-mails with a Coke representative. Vergara said in an e-mail that his “only demand” to assign his copyright interest was that he receive credit as adapter and producer, and the Coke representative replied that this was fine and that Vergara should “count on the credits.”

The two sides planned to draw up a formal written contract, but they never got around to it. Vergara later changed his mind and claimed that Coke had no right to use the lyrics.

But the court sided with Coke, saying the two sides had agreed on the terms and the e-mail “contract” was valid.

The case is important because it suggests that a company could wind up accidentally agreeing to a binding deal without realizing at the time the level of commitment it was making.

In general, all that’s necessary for a contract to be valid are an offer, an acceptance, and an intent at the time to be bound by the terms. A formal written contract is always good to have, but you can be stuck with a “contract” even if you never signed on the dotted line.

If you’re negotiating by e-mail and you want to be sure you don’t sign off on something before you’re ready, it’s wise to avoid summary responses such as “correct” or “I agree” after the other side has laid out an offer. You might want to hedge with a response such as “subject to further negotiations” or “contingent on receipt of a fully executed agreement.” These phrases might be clunky, but they do show that you don’t intend your e-mail conversation to be the final word on the subject.

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