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U.S. Court Decides Emails Equal a Signature for Contracts

By IBLS Editor

New York appellate court has ruled that e-mails were signed writings that modify contracts, in a April 1, 2008 ruling.  The case was filed in October 1999, and related to the claim of breach-of-contract. The court wrote, "The e-mails from plaintiff constitute "signed writings" within the meaning of the statute of frauds, since plaintiff's name at the end of his e-mail signified his intent to authenticate the contents (see Rosenfeld v Zerneck, 4 Misc 3d 193 [2004]). Similarly, Bloom's name at the end of his e-mail constituted a "signed writing" and satisfied the requirement of § 13(d) of the employment agreement that any modification be signed by all parties."

 The case concerned the sale of a New York-based public relations firm, Lobsenz-Stevens (L-S), to defendant Publicis S.A., a French global communications firm, and an American subsidiary. There were two contracts at issue, the first being a stock purchase agreement, related to the plaintiff selling all the stock of L-S to defendants. The second contract was an employment agreement, which stipulated that the plaintiff was to keep the position of Chairman and CEO of the new company, dubbed "Publicis-Dialog, Public Relations," New York (PDNY). The plaintiff was to keep the job for three years, and his duties were to be the "customary duties of a Chief Executive Officer."

 After the sale was executed, and against the terms of the agreement, in March 2001, Arthur H. Stevens was removed from his post as CEO of Publicis-Dialog. The reason that Stevens was let go was because the new company was not performing financially as hoped.

 In a March 5, 2001, the plaintiff met with Jon Johnson, former CEO of Publicis Dialog. Johnson showed Stevens a financial statements that showed the business had lost almost a million dollars in the year 2000. Plaintiff was removed as CEO, and given several options, including leaving the business, staying on and developing new business, or coming up with his own ideas that would be acceptle.

 At this point, Bob Bloom, former chairman and CEO of Publicis USA, joined into the conversation. Bloom and Stevens exchanged a series of e-mails, that culminated in a March 28 message from Bloom that outlined Stevens new role at PDNY. The email stated, "Thus I suggested an allocation of your time that would permit the majority of your effort to go against new business development (70%). I also suggested that the remaining time be allocated to maintaining/growing the former Lobsenz Stevens clients (20%) and involvement in management/operations of the unit (10%). This option, it would seem, is in your best interest because it offers the best opportunity for you to achieve your stated goal of a full earn-out. When I suggested this option, you seemed to have considerable enthusiasm for it and expressed your satisfaction with it so I, of course, assumed that it was an option you preferred."

 Thus, the e-mails with Bob Bloom told Stevens he could remain at the company if he spent 70% of his time building new business and the rest of his time renewing ties with former clients and doing management chores.

 Steven replied the next day to this offer: "Bob, to begin with, I want to thank you again for helping me restore the dignity and respect that I'm entitled to as a senior professional. Things were really getting out of hand until you intervened. What's happened since the lunch you and I had has been almost cathartic. . . That being said, I accept your proposal with total enthusiasm and excitement. . . I'm psyched again and will do everything in my power to generate business, maintain profits, work well with others and move forward."
Bloom replied to Stevens the same day, stating "I am thrilled with your decision. You have my personal assurance that all of us will continue to work in the spirit of partnership to achieve our mutual goal and function together as close senior collaborators in a climate of respect and dignity for all." The emails were properly identified by footer watermarks of the senders name.

 When Stevens was not retained after this, the case was filed for breach-of-contract. The case was won by Stevens. On appeal, a panel upheld Manhattan Justice Richard B. Lowe III's ruling that this email proposal and Mr. Steven's acceptance fulfilled a clause that obligated all parties to sign a modification of the employment agreement.

 The lawyers representing defendants Publicis USA, Peter Raymond, a partner at Reed Smith, claims that the decision creates a new standard for employment agreements, such that a standard contract clause requiring an amendment be in writing will have to specify that e-mails with a typed name and/or signature block do not create a signed writing if that is the sender's intent. In other words, should this law become a new standard, it represents a massive change in contract and Internet law and could create a massive impact on the subject area.

Full post as published by IBLS Internet Law Blog on April 13, 2008 (boomark / email).