• June 13, 2016
Photo by Jonathan Rotondo-McCord

Photo by Jonathan Rotondo-McCord

Every work day every business person is navigating (and, too often, sprinting) through an electronic thicket of email, voice-mail, text messages, and other digital data.

Steven P. Katkov, a Minneapolis-based real estate lawyer at Cozen & O’Connor, recently highlighted an important issue raised by our light-speed communication based on a recent decision out of a court in Massachusetts.

Noting and discussing the recent Massachusetts decision, Katkov addresses an important question for all business people and, perhaps, in particular, real estate brokers: when does an ongoing negotiation and the negotiation’s written trail of evidence coalesce into a legally binding and enforceable contract?

The issue is particularly critical in complex commercial real estate transactions because the stakes are so high, because of the often time-pressured wheeling and dealing, the ubiquitous potential of third-party suitors, other deal-breakers, and expensive and unforeseen consequences.

Katkov suggests the possibility of some form of digital disclaimer on written messages, whether email or text messages (perhaps along the lines of “This communication shall not be deemed to form a legally binding contract”) and, more generally, Katkov warns that wheeler-dealers, when negotiating and exchanging proposed “letters of intent” (commonly called LOIs), should expressly state within the LOI that the LOIs are not intended to be legally binding but are, rather, for discussion purposes only.

Otherwise, like the defendant Two Electronics in the linked Massachusetts case, buyers or sellers may find themselves bound by business deals they did not recognize they had entered into in a flurry of text messages or other quick communications.


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