We have been asked recently whether an agent’s email containing a counteroffer is binding. That’s an interesting question in itself, but it also opens up broader questions: what are the legal implications of acting as someone’s agent, and are there any “best practices” that can help keep an agent out of trouble?
Generally, an agent is a person who is empowered by someone else (the “principal”) to act on their behalf regarding a defined scope of issues. Actions which are taken by the agent (like entering into contracts) are legally binding on the principal as long as the agent was acting within the scope of authority which was granted to them. That is true whether the principal asked an agent to take a specific action for them or not. So, generally an agent can bind a seller or buyer to a real estate contract (or counteroffer) if they were authorized by their principal to do so.
But wait! Weren’t we talking about a counteroffer via email? That might change things. In Florida, contracts for the sale of real property must satisfy the “statute of frauds,” meaning that they have to be in writing and signed by the parties. An email that simply conveys the terms of a counter-offer isn’t signed by anyone, and it wouldn’t satisfy that standard. However, if the agent signed off on a counter-offer (after being duly and properly authorized to do so by their principal), and delivered that signed document via email, the statute of frauds would be satisfied. So, the more nuanced answer is: “it depends.”
Speaking of emails, can parties ever come to a binding agreement using email as a medium of communication and as a means for setting out terms? As long as the statute of frauds isn’t involved, they certainly can. The main reason that a signature is useful on a contract is to memorialize a party’s assent to the terms that have been agreed upon – after all, it’s awfully difficult to say that you didn’t agree to a contract that you signed! But that doesn’t mean that a signature is always required in order to have a binding contract, and it doesn’t mean that a binding agreement cannot be reached via email. Heck, even oral agreements are enforceable in many cases so long as a party is able to prove with certainty what terms were agreed upon.
On to best practices. While oral and email agreements may be valid (sometimes, and with the proper proof), they certainly aren’t the best option. Written contracts are always best because they set out terms with certainty and clarity, and they include the parties’ signatures which makes them much harder to challenge. By the same token, having the parties themselves enter into contracts (as opposed to having their agents acting on their behalf) is usually a better choice. If an agent enters into a contract for someone else there is always the possibility that the principal will try to back out (“Hey, they weren’t authorized to sign that for me!”), causing a dispute between the parties. That can lead to a party who has contract-remorse trying to shift blame to an agent in an effort to escape the contract. The cure for all of these problems: use written contracts, counteroffers, and addenda, and have them signed by the parties themselves. While that advice is required for real estate contracts (remember the statute of frauds), it is still a good idea for other contracts. We wouldn’t recommend that agents sign contracts, addenda, or counteroffers on behalf of clients because it opens them up to unnecessary risk; that being said, if you ever decide to execute documents on behalf of a client, the scope of that agency should be properly documented in a writing that is signed by your client.
As always, should you have any questions please contact your local real estate attorney.
Daniel C. Guarnieri, Esq., firstname.lastname@example.org
Berlin Patten Ebling, PLLC
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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