Negotiating agreements via email is a common practice. However, many people do not realize that those communications may inadvertently create an enforceable contract. While New York law allows electronic signatures in certain instances, it was not clear until recently whether a party must type their signature into the email or if an automatic email signature block is sufficient to create a valid contract. A New York appellate court addressed this issue and the decision may have a significant impact on anyone conducting business via email.

In a previous post, we discussed how and when the New York Electronic Signatures and Records Act (ESRA) applies to electronic records and signatures in New York State. An electronic signature can take several different forms and can be as simple as typing your name in an email. However, most professionals and business people have an email signature block that is automatically added to all their emails. Does that block qualify as a valid signature?

In July 2021, the New York Appellate Division, First Department decided this issue in Philadelphia Indemnity Co. v. Kendall in the context of a litigation settlement. The case involved a car accident. The lawsuit was submitted to arbitration, but while the parties were awaiting a decision, the attorneys continued to negotiate a settlement. They agreed by an exchange of emails to a $400,000 settlement. The plaintiff’s counsel sent an email to the other attorney which confirmed the settlement and contained the automatic signature block with his name and contact information. Unbeknownst to the attorneys, 3 days prior to the settlement, the arbitrator had rendered a decision awarding the plaintiff $975,000. The plaintiff’s counsel refused to proceed with the $400,000 settlement and demanded $975,000, taking the position that the settlement had not been finalized in the emails.

Under New York’s Civil Practice Law and Rules § 2104, stipulations of settlement related to a pending action only bind a party where “it is in writing and subscribed by him or his attorney.” The question for the Court was whether the email signature block met these requirements. The lower court agreed with the plaintiff that there was no valid contract, basing its decision on the fact that the email contained an automatic signature block and the attorney did not retype his name in the email. However, the Appellate Division disagreed with the lower court and held that the signature block was valid. The Court noted that requiring a signature to be typed anew, rather than being prepopulated in order to satisfy the requirement that the stipulation be “subscribed” (or signed), “reflects a needless formality that does not reflect how law is commonly practiced today.”

Citing the ESRA, the Court held that if an attorney sends an email “with the intent of relaying a settlement offer or acceptance and their email account is identified in some way as their own, then it is unnecessary for them to type their own signature.” While an automatic email signature block can constitute a valid electronic signature, the Court cautioned that the email must still be authenticated and contain all material terms to be a binding agreement.

The takeaway for parties to any agreement is to be careful about your email communications because you may unintentionally create an enforceable contract. If you are considering entering into an agreement, contact one of our attorneys to help you achieve the best result in your negotiation.