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That Information “is the next tier two.” Huh? What is that Supposed to Mean?

Businessman at desk sending text messages

That information “is the next tier two.” We actually received that line in an important communication today. We realized that the sender meant to write “annexed hereto,” but that talk-to-text apparently had other plans. Autocorrect failures are stuff memes are made of, but they are not the only potential pitfalls of conducting business by text, or even by informal emails.

Just as many workplaces, offices, and workspaces have become more casual (hello sweatpants on the couch for Zoom meetings!), business communication has sometimes become less formal, as well. Yes, conducting business by text is very convenient. Texting has its clear advantages over long emails: they are faster to send, faster to read, there is no subject line needed, they seem more personal, and are more likely to be noticed.

We have seen it estimated that over six billion texts are sent every day. How many of them are carefully considered, let alone proofread, before the writers hit send? It is clear to us that texting clients, contractors, and customers, or sending quick, informal emails, has already become mainstream business practice, but what does that mean in the context of contracting and other binding agreements?

The law adapts to modern technologies and business practices but sometimes does so slowly. As experienced business and contract attorneys, we understand how courts are likely to interpret modern communication methods and can advise clients how best to adjust.

As more businesses text each other to discuss proposals, conduct contract negotiations, make offers and counteroffers, discuss contract terms and address their legal responsibilities to each other, new legal issues are coming up all the time. Additionally, we have spoken with a number of clients and potential clients who didn’t realize that they could create contractual relationships in text messages, even without intending to.

Can You Create Contracts or Business Agreements via Text Messages?

As business communication becomes more likely to be done informally, attorneys and courts are often looking at text messages and brief emails through new lenses. What might have seemed, to one party, or even both parties, to a text message exchange, or email exchange, like a casual conversation, can, under certain circumstances, create a legally binding contract.

We hear from clients, or prospective clients, who are looking to enforce contracts they believe they formed by text and from other clients, or prospective clients, who are being faced with another person, or party, claiming that there was a contract formed by text message. At its heart, broadly speaking, a contract requires an offer, an acceptance of the offer, consideration, and the intention of the parties to create a binding contractual relationship.

You can see how those elements of contract formation could, with the right words and exchanges, be accomplished, by text. When that is the intention of both parties to the text exchange and both parties are in agreement as to what they contracted to do, there are fewer issues. Legal problems arise when one party never meant the text messages to constitute a contract, or when that party did intend to enter into a contract, but decides, at a later date, that it would be better to argue that there was no contract formed.

As experienced business attorneys who are very familiar with all of the relevant issues, we work with clients looking to enforce contracts, looking to avoid contractual obligations, and looking to cancel contracts, every day. We also advise clients so that they know how to make sure that their texts do not end up unintentionally creating contracts. We have worked with our clients to draft key language they can use to text without fear of unintended consequences.

Conducting Business in Text Messages Can Lead to Disputes

We have seen text-based contract and business disputes arise in all kinds of industries, but we have seen them most often in the construction industry. Text messages can have a significant impact on construction projects, and particularly, on construction contracts. Construction projects all have some combination of owners, construction managers, general contractors, and subcontractors communicating by cell phone and by text message.

The work often changes without much notice, to accommodate job site conditions, scheduling, unexpected challenges and other issues that affect what may have been contracted for. Text messaging is a quick and easy way for a contractor or other party to notify one or more people about a change that needs to be made and for the responsible party to approve the change. The legal issue becomes whether the text message exchange can change a contract.

As is the case with nearly every legal issue, the answer is that it depends. We have worked, and are working, with clients in the construction industry to address these issues proactively, to best protect our client’s interests. We work with our clients to understand how they like to work.

For example, we need to know whether they like to use text messages, or similar messaging services, to communicate about a project, to receive instructions, to give directions, and to accept, or reject, changes to the work. Our experience has shown us that the best contracts are drafted and negotiated with a strong focus on the client’s project goals, on the client’s preferred practices and on real-life, practical considerations, like modern technology.

Other Risks of Text Messages and Business Disputes

There are certainly other issues that come up in connection with informal business communications. For example, texts are prone to being deleted, and should text messages become the subject of a lawsuit, or relate to a business dispute, the failure to preserve them could hurt a party’s position. We will address those issues in a future article. For now, please accept our recommendation that, if you text, make sure you are sending what you meant to write and that what you meant to write won’t create any potential contract disputes or business disputes.

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