Court Binds Parties to Purchase and Sale Agreement Pursuant to Texts Between Agents

In St. John’s Holdings, LLC v. Two Electronics, LLC, a Massachusetts court recently found a contract to be enforceable under the Statute of Frauds through texts between the real estate brokers.  In St. John’s Holdings, buyer offered to purchase certain real property for $3.232 million through a letter of intent.  The seller responded.  The agents continued to text back and forth with additional terms.  The seller subsequently declined to sell the property to the buyer and sold the property to a second buyer.  Plaintiff filed suit alleging that there was a binding contract.  The seller challenged plaintiff’s case claiming that the Statute of Frauds had not been met.  The Massachusetts court held that a contract had been formed by the texts between the real estate brokers.  The court specifically noted that the agents had placed their names on the texts, which contained contract terms.  Therefore, these texts were construed to be part of the contract negotiations. 

Agents need to be cautious in sending emails and texts.  In California, agents cannot bind their principals to contract terms.  However, in this case, the court held that the principals had exchanged the terms through the agents. 

Shannon B. Jones, Partner, sbj@sbj-law.com