In today’s fast paced business world where deals are struck and agreements made at the click of a computer button, it is important to know what can be the basis of an enforceable agreement. A common misconception is that an "agreement" has not been reached and finalized until a formal document incorporating the terms of the agreement has been executed by all parties. However, a recent decision from the North Carolina Court of Appeals confirms that signing such a formal document may not necessary.

In The Currituck Associates-Residential Partnership vs. Hollowell (September 7, 2004), the North Carolina Court of Appeals enforced a settlement agreement that was established by letters and e-mails between the parties’ attorneys. While both parties understood that a "formal document" would be executed to reflect the agreement reached, the failure to have such an agreement executed did not mean the parties had not previously made a contract.

In this case, correspondence and e-mails between counsel addressed the sale of real estate. The parties were in litigation over a contract and depositions were pending. However, Hollowell’s counsel sent a letter to Curritck Associates’ counsel outlining a proposed settlement. Through several correspondence and e-mails, the settlement terms were agreed upon by the parties. Hollowell’s attorney, in fact, sent an e-mail stating he was "pleased that we have reached an agreement." The e-mail further confirmed that since the parties had reached a settlement, that the pending depositions would be cancelled.

What is the lesson to be learned from this case? The law requires parties to have a "meeting of the minds" in order to form an enforceable agreement. However, provisions of an agreement need not be set out in a single instrument and it is sufficient if the contract provisions can be determined from separate but related writings. It is clear from the Currituck Associates case that writings can also include e-mails between parties. You should keep in mind that during any negotiation, an e-mail can be as binding against you as a written letter, a fax or any other document. As long as the essential elements of the contract are identified in the e-mail, a contract can be enforced.

If you have any questions regarding this alert, please contact Nick Ellis at 252.972.7115 or jnellis@poynerspruill.com.