Contract Claim Based on Exchange of E-Mails Should Be Allowed to Go Forward

On March 29, 2018, the Court of Appeals issued a decision in Kolchins v. Evolution Markets, Inc., 2018 NY Slip Op. 02209, holding that a breach of contract claim based on an exchange of e-mails should be allowed to go forward, explaining:

Here, we conclude that, based on all the documentary evidence proffered by defendant, a reasonable fact-finder could determine that a binding contract was formed. Ertel's initial email to plaintiff stated that "[t]he terms of our offer are the same [as the] terms of your existing contract" — apart from "a clarification" concerning an issue that plaintiff characterizes as minor — and outlined the core terms that were included in the 2009 Agreement. He added that, if plaintiff had "[a]ny further questions" he should consult his "existing contract." Inasmuch as this email explained that "the terms of the offer" were to be nearly identical to the terms of plaintiff's existing contract, a reasonable fact-finder could interpret it as evincing an objective manifestation of defendant's intent to enter into a bargain, such that plaintiff was justified in understanding that his assent to that bargain was invited and would conclude it. Put differently, it could reasonably be inferred that Ertel's email constituted a valid offer by defendant. In response to that email, plaintiff wrote "I accept. pls [sic] send contract," to which Ertel replied, "Mazel. Looking forward to another great run." Affording plaintiff the benefit of every favorable inference, this exchange — in essence, we "offer" and "I accept," followed by an arguably congratulatory exclamation, coupled with a forward-looking statement about the next stage of the parties' continuing relationship — sufficiently evinces an objective manifestation of an intent to be bound for purposes of surviving a motion to dismiss. Although Ertel's email referenced one outstanding "clarification," the parties' further communications indicate that such clarification was incorporated into the first draft of the new agreement sent by Zeliger to plaintiff, and no evidence was offered to suggest that plaintiff resisted that change to the terms of the 2009 Agreement.

We reject defendant's argument that plaintiff's contract claim should have been dismissed because the additional correspondence defendant proffered in support of its motion to dismiss reflects a lack of mutual assent to material terms — such as plaintiff's minimum guaranteed compensation and the length of the non-compete term — and that this indefiniteness renders the purported contract invalid as a matter of law. As the Appellate Division concluded, that correspondence does not conclusively refute contract formation. The additional emails reveal gaps in time between the parties' written correspondence, refer to discussions that are not reflected in the record before this Court, and do not include conclusive evidence of material disagreements regarding the terms of the agreement sufficient to negate the initial intent to be bound, as a matter of law. Because it is possible to draw competing inferences based on the totality of the parties' communications as set forth in this record — which does not otherwise reflect that defendant expressly reserved the right not be bound except in a formal written document — defendant has not met its burden to conclusively refute the allegations of the complaint that the parties entered into a new contract.

(Internal quotations and citations omitted).

In New York, a contract need not be in writing. However, whether oral; embodied in an exchange of e-mails, like the alleged contract discussed above; or in a full, formal written document, to be binding a contract must contain the material terms of the agreement. As this decision shows, there sometimes are disputes over whether all the material terms of the contract are embodied in the agreement being sued upon. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.