Wednesday, October 6, 2010

First Department Reaffirms Prior Holding That E-mails May Satisfy the Statute of Frauds

In Naldi v. Grunberg, the First Department reaffirmed its prior holdings that an e-mail will satisfy the statute of frauds so long as its contents and subscription meet all of the requirements of the governing statute. At issue in Naldi was plaintiff's claim to an alleged right of first refusal for the purchase of real property that was memorialized in an e-mail only. Although the particular e-mail at issue did not meet the statute of frauds' requirements, the Court engaged in a lengthy analysis to explain that an e-mail may nevertheless be used to satisfy the statute, noting that "e-mail is no longer a novelty" and that it is "omnipresent in both business and personal affairs."

The Court began its analysis with a summary of the Electronic Signatures in Global and National Commerce Act (E-SIGN). Congress enacted E-SIGN to govern transactions affecting interstate or foreign commerce in which an electronic signature or contract was used. According to E-SIGN, such contracts could not be denied legal effect or validity solely on the basis that an electronic signature or record was used in its formation.

After E-SIGN was enacted, the New York Legislature amended the Electronic Signatures and Records Act (ESRA). As part of ESRA's "Legislative intent" it was noted that the bill was intended to "complement" E-SIGN and permit the use of electronic signatures and records in the context of commercial transactions. As such, the First Department found that the Legislature had incorporated the substantive terms of E-SIGN into New York state law.

The Court concluded, therefore, that "E-SIGN's requirement that an electronically memorialized and subscribed contract be given the same legal effect as a contract memorialized and subscribed on paper is part of New York law," and thus an e-mail may satisfy the statute of frauds.

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