When it comes to writing contracts, there’s always a tension between best practices and doing what’s minimally acceptable to keep your ass covered. If it were up to me, every client would use detailed written agreements for every transaction with every one of their clients. But I’m not an unreasonable person; I know firsthand the pressures of small business ownership (being one myself). I understand that level of diligence can be hard to maintain, especially at the beginning when you’re still figuring out how to put dinner on the table for your loved ones.
So you need a contract, but can’t spend hours writing one yourself and can’t afford to hire an attorney to do it for you; what do you do? Use email, of course!
There are only four things you need to have a legally valid contract:
- An offer by one party;
- An acceptance by the other party;
- An exchange of promises, goods, services, or money between the parties (called “consideration” by attorneys); and
- An understanding of the terms of the agreement by both parties.
As long as those requirements are met, your agreement can take any form. And in the absence of a dedicated contract drafted for your specific transaction, email can sometimes be a reasonable alternative. It’s easy, it can be accessed anywhere, it requires no special action or drafting on your part, and you can do it yourself.
But email is far from perfect and can actually be detrimental if you’re not careful. How so?
- Conversations in email are generally less structured. That lack of structure means that necessary terms can be hard to locate when email threads get really long, and terms that do end up in there may be vague or ambiguous (thus negating the contract, at least in part).
- Email is digital conversation, meaning that during the conversation, you and the other party may, without thinking, put in terms that ultimately are invalid, illegal, or non-performable.
- Because email by its nature is informal, you may neglect to discuss many necessary terms like liability, delivery requirements, or who owns the intellectual property after the contract is performed.
Ultimately, I would never counsel a client to use email instead of a dedicated contract. Recently, someone asked me about it and I believe my exact words to him were: “that would be a colossal mistake.” His contract was incredibly complex and email would have done more harm than good. Email, for all its benefits, is simply not the appropriate forum for drafting every agreement.
But if we’re talking about just doing what's minimally acceptable to cover yourself, in many cases email isn’t a bad way to go. I’d rather you have something in writing than nothing. But that also doesn’t let you off the hook for engaging in best practices when you can. Just because something is better than nothing, doesn’t mean you should settle for that.
[Author’s Note: you may have noticed that signatures are not required to make a contract valid. That’s because signatures, while important, are more ceremonial in nature. They symbolize that you’ve read the agreement and are assenting to it. But they are not considered necessary to have a legally valid contract.]