Technology has helped improve the efficiency of the practice of law. But the ease and use of email requires more caution, and your email can bind your client. The stories of attorneys sending “reply all” to the wrong audience and the effect on attorney-client privilege pop up nearly every week. Emails are also literal and may not convey the background behind the email. The test I heard as a young lawyer was before you email, what would it look like when blown up as a trial exhibit and the jury looks at it. Electronic communications require caution.
The United States Court of Appeals in Devon Energy Prod. Co., L.P. v. Line Finders, LLC, 2022 U.S. App. LEXIS 25728 (10th Cir. Sept. 14, 2022) faced whether a draft settlement agreement was binding when Line Finders’ attorney emailed opposing counsel that a draft settlement agreement looks fine, asked for an executed version, and that the attorney would obtain the client’s signature.
The settlement agreement did not get signed by Line Finders and Devon Energy moved to enforce the settlement agreement. Line Finders responded stating the settlement agreement was contingent on mutual execution. Devon responded that the settlement agreement superseded all past understandings and did not requires signatures, and no fraud was involved and had been accepted. The district court enforced the settlement agreement and held that Line Finders’ accepted the settlement agreement via email and nothing in the settlement agreement required mutual execution.
On appeal, Line Finders contended the district court erred in enforcing the settlement agreement because all parties had not signed it, that it was premised on mistake of fact and fraud, and that the district court should have held an evidentiary hearing. The 10th Court of Appeals affirmed the district court’s finding of enforceability. The history of the back-and-forth offers and counteroffers and various modifications of the agreement until the attorney accepted the settlement were a key point for the court of appeals. The court also rejected Line Finders’ reliance on the attorney’s statement he “would procure [a] signature.”
The court of appeals held that it was the acceptance of the settlement, not counsel’s procurement of the signature that mattered. Devon Energy Prod. Co., L.P. v. Line Finders, LLC, 2022 U.S. App. LEXIS 25728 *7, citing, E. Cent. Okla. Elec. Coop., Inc. v. Okla. Gas & Elec. Co., 505 P.2d 1324, 1328 (Okla. 1973) (holding that an “agreement to make and execute a certain written agreement, the terms of which are mutually understood and agreed on, is in all respects as valid and obligatory as the written contract itself would be executed.”); see also 2 Williston on Contracts § 6:44 (4th ed. May 2022 update). The court also rejected the argument that there was mistake, fraud, of unilateral mistake of fact.
The Devon opinion has much to digest and many facts to be considered. And without getting into the statutes for electronic agreements and signatures, the real message is that electronic acceptances should be enforceable in today’s tech environment. People do business through email and text and these agreements are and should be enforceable. The opinions in this blog are solely the author’s and any comments, suggestions, and replies can be sent to john@jrjoneslaw.com.
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