So many people make and confirm agreements via text, WhatsApp, or other electronic message but then never formalize their agreement. This is also true with amendments to existing agreements. I think of text agreements like agreements that are written in pencil. Agreements written in pencil and texts can be “real contracts” contrary to the urban myth that has been used by businessowners who do not know better.
A court in New York recently upheld this general principle. Thankfully for the plaintiff trying to enforce an equity grant, one five-minute WhatsApp exchange clearly showed the defendant granted a ten percent ownership interest in the company. Although the litigation is ongoing, an adverse opinion would have killed the plaintiff’s multi-million dollar claim early in the case.
But why run the risk a court could rule against you. While we do not share legal advice in blog posts, we will share real life advice: be a nudge to make sure your text, oral, and other informal agreements are properly written up and agreed upon.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, real estate, and other issues. He can be reached at firstname.lastname@example.org or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.