New Case Exposes the Risks of Relying on Text Messages to Alter or Create ContractsApril 4, 2022 – Articles
In a recent real estate case, a court dismissed a lawsuit by a buyer to require the seller to sell him the property because the court found that the agreements between the parties contained in text messages and emails were unenforceable. This raises a significant concern over the enforceability of changes or amendments to construction contracts made by text or email, especially ones that will take a long time to perform.
The specifics of the case are outlined below, but I wanted to address two important issues contractors need to keep in mind as they read it. While this case involves a real estate contract, rather than a construction contract, it is important to note that Florida’s Statute of Frauds — the basis for the court’s decision — can impact construction contracts. Florida’s Statute of Frauds, found in 725.01, Florida Statutes, governs many types of transactions, including “any agreement that is not to be performed within the space of 1 year from the making thereof.” Thus, if you enter into a vague contract to build a house that’s going to take more than one year to build, and attempt to fill in the gaps with text messages and emails later, you may end up with problems enforcing the details or changes made by text messages.
Further, given the current delays in materials and labor, it is easy to see a circumstance where a change order, side contract, or addendum made by text message may not be performable within one year. Those types of agreements may be subject to Florida’s Statute of Frauds and unenforceable. So while this case is not directly connected to construction, it illustrates the valuable lesson of making sure to have all the details of your project in writing and signed by the parties.
Turning to the facts of the case, Walsh v. Abate arises from a failed real estate transaction. In December 2020, a real estate agent emailed an offer to purchase a home for $3.1 million on behalf of a buyer. The offer was sent on a standard FAR/BAR contract. The seller’s agent responded that the seller would only accept $3.4 million. Shortly thereafter, the buyer’s agent responded that the buyer would meet the $3.4 million price, with all other terms remaining the same and a “quick cash close." The buyer’s agent also asked that the seller counter the original offer with his $3.4 million offer, sign it, and then the buyers would sign.
In response, this time via text message, the seller’s agent stated that the seller accepted the $3.4 million and asked to close on Feb. 1. The buyer’s agent texted back that this was confirmed. Several days later, the seller’s agent emailed the buyer’s agent, thanking the buyers for their patience and reiterating that the sellers accepted the $3.4 million and would like to close by Feb. 1.
Despite this, a few days later, the seller’s agent emailed the buyer’s agent and said that the sellers had accepted a different offer. The buyer’s assignee then filed suit to require the seller to sell him the property, arguing that the emails and text messages between the parties constituted a binding contract between the parties.
At the seller’s request, the trial court entered an order dismissing the lawsuit. The court found that the contract between the parties was never fully executed. The emails and text messages could not form a binding contract because they violated Florida’s statute of frauds, which requires, among other things, contracts for the sale of real estate to be in writing and signed by the parties. On appeal, the Fourth District Court of Appeal agreed with the trial court. It noted that the evidence before the trial court illustrated an initial signed offer by the buyer, and after that, only unsigned emails and text messages between the real estate agents.
For more information about how a similar situation could impact your construction contract, contact Jason Lambert or your Dinsmore attorney.