Tuesday, April 28, 2009

Contracts - Does a Series of E-Mails Constitute a Written Contract?

Most legal claims are barred if they are not asserted within a certain period of time after they "arise" (an aside: when a claim "arises" is an issue about which there can be considerable disagreement, but generally a legal claim arises when the problem/injury on which the claim is based either (1) happens or (2) is discovered).

Sometimes the parties to a contract will agree on the period of time during which a claim must be brought. For example, many product warranty agreements will last for one year. If your new coffee maker comes with a one year warranty agreement and it breaks down 18 months after you purchase it, then your legal claim against the manufacturer is (alas!) barred by the language in the warranty.

Oftentimes, however, a contract is "silent" about this issue, and the period of time after which one's claim is barred is determined by the "statute of limitations" that applies to that kind of claim. State and federal laws include a variety of different time-periods for statutes of limitations, depending on the nature of the legal claim.

In Virginia, one of the most important statutes of limitation is at
Code of Virginia Section 8.01-246 (you can read the entire text of the section here), which states the rule for legal claims arising from contracts.

Importantly, § 8.01-246 differentiates between the statutes of limitation for written contracts and the statute for oral contracts:
  • Claims brought under written contracts must be brought within 5 years.
  • Claims brought under oral contracts must be brought within 3 years.
In a fascinating recent decision in the Circuit Court for the City of Charlottesville (Goodenough v. Province, CL06-373, Order dated April 8, 2009), the Court considered the issue of whether a claim that allegedly arose from a series of e-mails, which were exchanged after acceptance of the underlying contract for computer programming services, would be barred under the shorter 3 year statute for oral contracts.

The decision in Goodenough v. Province addresses a number of complex issues of contract law, however a significant "take-away" from the decision is the Court's holding that the e-mail exchanges did not, in and of themselves, constitute "a writing, signed by the parties" which would be governed by the longer 5 year statute of limitations. As of this entry, we do not know whether the decision has been appealed.

Goodenough and other recent decisions are likely to be early examples of many cases, yet-to-be-decided, which will need to address (1) the relationship between e-mail communication and traditional written contracts and (2) the tricky questions that electronic communication raise.

Slowly but surely, a framework of precedent and case law will be generated which will help to interpret laws that -- when they were written -- probably did not contemplate the huge role that electronic communication plays in our lives today.