Emails can be useful for planning and negotiating a real estate deal. When exchanging emails while negotiating a transaction, you may want to consider whether you are creating an enforceable contract. Two recent rulings from the Texas Supreme Court provide some guidance on when an email exchange can form an enforceable contract.

Clear Agreement

A pipeline company, Copano Energy, began negotiations via email with a group of landowners for the company to purchase an easement to build a pipeline. The final compensation offer was significantly lower than the amount previously discussed via email, however, and the pipeline was never built. The landowners sued the company for breach of contract.

Remember: The law on contracts formed via email or text message is continuing to evolve. While emails and other forms of electronic communication are commonly used in real estate transactions, be clear about the intent of any electronic communication with clients and other parties to avoid unintentional legal obligations.

In Copano Energy, LLC vs. Stanley D. Bujnoch, Life Estate, the court ruled that the series of emails exchanged during negotiations, when taken together, did not form an enforceable contract because essential elements of the agreement were not clear from the writings. Texas Supreme Court Justice Jimmy Blacklock wrote that there was no “written memorandum which is complete within itself in every material detail,” as required. Emails can be considered binding if both sides agree to the same terms—what the law calls “intent to be legally bound.”

Make it Official

In Chalker Energy Partners III, LLC vs. Le Norman Operating LLC, the court also ruled that emailed negotiations did not constitute a binding contract. In the case, Chalker and 17 individual owners planned to sell their oil and gas assets through a bidding process. The terms of the deal required a mutually agreed upon purchase-and-sale agreement (PSA) to move forward. Le Norman Operating, LLC, the failed bidder, argued that the owners breached an agreement reached through email negotiations. The owners, however, argued there was no contract because no PSA existed. The court ruled in favor of the owners because the execution of a PSA was an essential part of the agreement.