On July 08, 2021, the First Department issued a decision in Matter of Philadelphia Ins. Indem. Co. v. Kendall, 2021 NY Slip Op. 04284, holding that an attorney’s standard e-mail signature block is sufficient to create a binding agreement, explaining:
CPLR 2104, entitled “Stipulations,” reads in pertinent part: “An agreement between parties or their attorneys relating to any matter in an action . . . is not binding upon a party unless it is in a writing subscribed by him or his attorney . . . .” The Court of Appeals has said that the plain language of the statute directs that the agreement itself must be in writing, signed by the party (or attorney) to be bound.
The Court of Appeals has not opined on whether emails can satisfy CPLR 2104. In 1996, the Court of Appeals did find that a preprogrammed name on a fax transmission did not fulfill the subscription requirement. However, the Parma court wrote in a different era, when paper records were still an important modality, maybe the most important modality, of recording information in law and business. Since that time, the electronic storage of records has become the norm, email has become ubiquitous, and statutes allowing for electronic signatures have become widespread. For these reasons, and those that follow, we find that Parma is not controlling.
Supreme Court relied on the Second Department’s decision in Forcelli v Gelco Corp. Forcelli is in accord with this Court’s precedent, and we have cited it as persuasive authority. In Forcelli the plaintiff reached an agreement with the defendant to settle his personal injury case while the latter’s summary judgment motion was pending, and the parties’ counsel exchanged emails confirming that the plaintiff’s counsel had accepted the offer and would prepare the release for the plaintiff to sign. The same day that the court granted the defendant’s motion for summary judgment dismissing the case, the plaintiff’s counsel sent the requested documents to the defendant’s counsel. The defendant then refused to proceed with the settlement.
The Second Department held that the parties’ counsels’ emails created a binding settlement agreement. As for CPLR 2104’s subscription requirement, the Court held that the defendant’s counsel’s email containing her printed name at the end thereof supported the conclusion that she effectively signed the email message:
we note that the subject email ended with, ‘Thanks Brenda Greene,’ which appears at the end of the email text. This indicates that the author purposefully added her name to this email message, rather than a situation where the sender’s email software has been programmed to automatically generate the name of the email sender, along with other identifying information, every time an email is sent. The rule espoused by Forcelli and our own precedent is that an email in which the party’s or its attorney’s name is retyped at the end of an email is sufficiently subscribed for purposes of CPLR 2104.
Conversely, cases have found that an email in which a party’s or its attorney’s name is prepopulated in the email is not sufficiently subscribed for purposes of CPLR 2104.
We now hold that this distinction between prepopulated and retyped signatures in emails reflects a needless formality that does not reflect how law is commonly practiced today. It is not the signoff that indicates whether the parties intended to reach a settlement via email, but rather the fact that the email was sent. Since 1999, New York State has joined other states in allowing, in most contexts, parties to accept electronic signatures in place of “wet ink” signatures. Section 304(2) of New York’s Electronic Signatures and Records Act (ESRA) provides: “unless specifically provided otherwise by law, an electronic signature may be used by a person in lieu of a signature affixed by hand. The use of an electronic signature shall have the same validity and effect as the use of a signature affixed by hand.” Moreover, the statutory definition of what constitutes an “electronic signature” is extremely broad under the ESRA, and includes any electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record. We find that if an attorney hits “send” with the intent of relaying a settlement offer or acceptance, and their email account is identified in some way as their own, then it is unnecessary for them to type their own signature. This rule avoids unnecessary delay caused by burden-shifting swearing contests over whether an individual typed their name or it was generated automatically by their email account.
An intuitive concern expressed by some courts is that email’s ubiquity and ease appears to undercut its intentionality. The Second Department in Forcelli, and other courts that have required a retyped signature, have expressed unease about the casual nature of email. It is fair to say that most email users have on occasion sent emails that they did not mean to transmit, or that they regretted soon after transmission. However, here we are considering a specific subcategory of email on a subject freighted with ethical obligations. A lawyer has ethical obligations to communicate all settlement offers to a client and to counsel the client on the consequences of settlement. New York’s Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.2(a) states that a lawyer shall abide by a client’s decision whether to settle a matter. Rule 1.4(a)(iii) requires a lawyer to promptly inform the client of material developments in the matter including settlement or plea offers. These ethical obligations help to ensure that an attorney considers their authority before communicating settlement offers and acceptances to opponents, whatever the mode of communication.
While we jettison the requirement that a party or a lawyer retype their name in email to show subscription, that does not mean that every email purporting to settle a dispute will be unassailable evidence of a binding settlement.
First, there may be issues of authentication. Email accounts can be hacked. An email from an attorney’s account is presumed to be authentic, but that is a rebuttable presumption. Just as a party may attack a hardcopy settlement offer or acceptance as a forgery, a party that claims an email was the product of a hacker (or of artificial intelligence, or of some other source) may rebut its authenticity.
Second, an email settlement must, like all enforceable settlements, set forth all material terms. That condition is satisfied here where the sole issue is how much respondent would accept in settlement of her SUM claim. Respondent argues that the settlement was conditioned on the respondent signing the release. We disagree. The Release and Trust Agreement was to be further documentation of the binding agreement constituted by the parties’ counsel’s emails agreeing to settle respondent’s claim for $400,000. The material term of the parties’ agreement to settle respondent’s claim being the sum of money that petitioner would pay respondent, respondent’s execution of a general release was essentially a ministerial condition precedent to payment.
(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 settlement agreement discussed above; or in a full, formal written document, to be binding a contract must contain the material terms of the agreement and, as discussed here, certain formalities indicating an intent to be bound. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.
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