The Medium Is Not the Message

While contracting on-line can improve efficiencies, reduce paperwork, and streamline operations, it can also create confusion. Consider the following hypothetical exchange of e-mails:

Planner to hotel salesperson: Do you have 100 guest rooms and meeting space for 150 in a schoolroom setup for June 14 and 15, 2004?

Salesperson to planner: Yes, we can handle it. I've checked the books and everything is clear.

Planner to salesperson: Great! We'll take it.

Did the above exchange create a contract? Certainly. Contracts can be formed by oral or written agreement and they can be implied by conduct of the parties. They can also be formed electronically. An "electronic contract" can be created entirely by the exchange of e-mails where an offer and an acceptance are evident or they can be made by a combination of electronic communications, paper documents, faxes, and oral discussions. But what are the exact terms of the contract? Is it enforceable?

The Internet hasn't changed the basic rules of contract law. To determine the terms of a vague or incomplete contract, the rules follow a hierarchy of evidence. The law first considers the terms stated in the discussions and writings exchanged by the parties that are not in conflict. Next considered are the terms implied by the current and past conduct of the parties, followed by the terms implied by industry custom and practice, and finally, the terms implied by law (i.e., damages for breach, liability for negligence, jurisdiction and venue, etc.).

As far as enforceability, contracts generally do not have to be in writing or even signed by either party to be enforceable. Rather, contracts may be formed by conduct of the parties and may be oral unless they fall under the Statute of



Frauds. The Statute of Frauds is a series of statutes that have been passed in most states and that require that certain types of contracts be in writing to be enforceable.

In the meetings industry, two of those types are prevalent. These are contracts that can't be performed within one year from the date they are made (any meeting or event planned for more than 12 months from now falls into this category) and contracts for the sale of goods over $500 (contracts for food and beverage fall into this category). When the Statute of Frauds applies, there must be "a writing" sufficient to indicate that a contract has been made between the parties, but the definition of "a writing" is not limited to ink on paper. Rather the essence of the requirement is that the communication be reduced to a tangible form, and electronic transmissions recorded in a tangible form (i.e., printed out or in a computer log).

If a planner and supplier exchange promises by e-mail, the law will interpret this agreement the same way it would interpret a more traditional contract written on paper. Parties to an electronic contract should be just as careful in articulating the terms as they would be in traditional contracts.