(Published in the Piedmont Business Journal column “Parting Shots”, Fall 2013)
It was with great interest that I read the April 9, 2013 opinion of Judge Jams C. Caheris of the U.S. District Court for the Eastern District of Virginia in the matter of Cameron Jibril Tomaz vs. It’s My Party, Inc. d/b/a I.M.P Inc. et. al. I recommend reading this opinion for it presents a good primer of some basic contract principles which are always good to review, but a primary issue was whether or not a contract could be construed from email messages and some performance on the part of one of the parties. In this case, the Court found that no contract existed because in one of the emails it was clearly stated that the contract was still “subject to signature and approval …..”.
The dispute involved a musician Cameron Jibril Thomaz (performing under the name “Wiz Khalifa” and a concert promoter It’s My Party, Inc. (d/b/a “I.M.P, Inc.”). Mr. Thomaz claimed that I.M.P., Inc. breached its contractual obligation to promote and sell tickets to his concert which was to take place at the Patriot Center on the George Mason University campus.
The Court hung its ruling primarily on the clear statement within the email chain that the contract was still subject to “signature and approval of the Artist”. Without that statement, it may have been ruled that a contract existed even though the promoter did not intend for there to be an enforceable obligation. Even with such a statement in the email chain, the promoter ended up defending itself in federal court which is not an inexpensive experience.
I have seen this occur too many times with otherwise experienced and sophisticated business people. Unfortunately worded emails, whether it be a single email or the typical litany of conversations in an email chain, can be construed as a contract either as a writing or as evidence of the terms of an oral agreement. Email has many conveniences and it is indeed helpful. It avoids “phone tag” and enables one the luxury of thinking before responding. However, too many times, business people do not take the time to use the luxury of deliberation before responding. I prefer good old fashioned face to face in person communication for matters which are really important and then conveying the terms of a business relationship building up to a contract such as offers, counteroffers and proposals in documented writings. It should always be clear between the parties at what point a contract is made.
When a contract is made it should be in writing and contain what is known as an integration clause. (I have also seen it referred to as the “Entire Agreement” clause). Simply stated, it says that this contract which the parties all have duly signed, contains the only terms of the deal. Emails, letters, texts, notes and all other such clutter falls away leaving one clear document of an understanding between the parties. Do not get hooked on the unintended.