Are Text Messages Legally Binding? Understanding the Law and Your Risks

In our hyper-connected world, text messages fly back and forth for everything from quick hellos to serious business discussions. But can a casual tap-tap-send on your phone lock you into a legally enforceable agreement? The short answer is: Yes, under certain conditions, text messages can absolutely form legally binding contracts. This might come as a surprise, given the informal nature of texting.

This article will delve into the legal framework that makes this possible, the essential components a text exchange needs to be considered a contract, scenarios where texts hold up in court (and when they don’t), the challenges of using texts as evidence, and best practices for both individuals and businesses.

How ESIGN and UETA Made Text Messages Legally Binding

You might wonder how a seemingly informal text message can carry the same legal weight as a formally signed paper document. The groundwork for this was laid by two key pieces of legislation in the United States. These laws recognized that the digital age required an update to how we view “writings” and “signatures.”

The Electronic Signatures in Global and National Commerce Act (ESIGN Act) is a federal law enacted in 2000. Its primary purpose is to ensure that electronic contracts, records, and signatures are given the same legal validity as their paper counterparts. As detailed by the FDIC, the ESIGN Act facilitates the use of electronic records and signatures in interstate and foreign commerce by ensuring their legal recognition. This means that a contract cannot be denied legal effect or enforceability solely because it is in electronic form.

Complementing the federal ESIGN Act is the Uniform Electronic Transactions Act (UETA). Most states have adopted UETA (or similar laws based on it). UETA provides a legal framework at the state level for the use of electronic signatures and records in transactions. Like ESIGN, it confirms that if a law requires a record to be in writing, an electronic record satisfies that law, and if a law requires a signature, an electronic signature satisfies that law. This means emails and text messages can qualify as electronic signatures under the right circumstances.

Together, ESIGN and UETA ensure that agreements made via text message aren’t automatically dismissed simply because they’re not on paper. They can be considered “in writing” and potentially “signed” through electronic means, depending on the content and context of the messages.

What Does It Take for a Text Message to Become a Legally Binding Contract?

For any agreement, whether scribbled on a napkin, formally drafted by lawyers, or exchanged via text, to be considered a legally binding contract, it must typically contain four essential elements. Let’s look at how these apply to text messages:

• Offer: One party must clearly propose specific terms to another. This means the text message should detail what is being offered.

Example: A text saying, “I’ll sell you my 2019 Ridgetop mountain bike for $300. Deal?” clearly presents an offer.

• Acceptance: The other party must unequivocally agree to the exact terms of the offer. An ambiguous response or a counter-offer doesn’t count as acceptance.

Example: Replying “Yes, I accept your offer to buy the bike for $300” would constitute clear acceptance. However, a reply like “Would you take $250?” is a counter-offer, not an acceptance.

• Consideration: Both parties must exchange something of value. This could be money, goods, services, or a promise to do or not do something. Each side must give and get something.

Example: In the bike sale, one person gives up the bike (value) and receives $300 (value); the other gives up $300 (value) and receives the bike (value).

• Intention to Create Legal Relations (Mutual Assent): Both parties must intend for the agreement to be legally binding. This means they understand they are entering into an enforceable contract. Sometimes, the context of the conversation and the language used help determine this intent.

Example: If two friends are casually texting about one potentially selling an old video game to another with lots of “lol” and “maybe,” it might lack serious intent. But if they clearly state terms and agreement, the intent might be present.

If a series of text messages clearly demonstrates all these elements, a court could find that a binding contract was formed.

Examples of Enforceable Agreements Through Texts

It’s one thing to talk about legal theories, but do courts actually enforce agreements made via text? Yes, they do. While every case is fact-specific, there are instances where text message exchanges have been deemed sufficient to create a binding contract. This often happens in simpler transactions or when the texts clearly outline the core terms of the deal.

For example, courts have upheld text messages in scenarios like:

• Confirming the terms of a simple service agreement.
• Agreeing on the price and delivery of goods.
• Modifying an existing agreement, provided the modification itself meets contract requirements.

When Is a Text Message NOT a Legally Binding Contract?

While texts can form contracts, they often don’t. Several factors can prevent a text message exchange from being legally enforceable. It’s crucial to understand these situations to avoid unintentionally creating a binding agreement or mistakenly believing one exists.

Here are common reasons why a text message might not be considered a binding contract:

• Lack of Essential Elements: If any of the four core elements (offer, acceptance, consideration, mutual intent) are missing or unclear, no contract is formed.

Example: Texting “Hey, thinking of selling my car soon” is not an offer. Texting “Cool car!” is not an acceptance.

• Informal Language and Ambiguity: Text messages are often filled with slang, emojis, typos, and abbreviations. This informality can make it difficult to determine if there was a serious intent to be legally bound or if the terms are clear enough.

Example: “C U Friday maybe 4 lawn if weather good $50?” is far less clear than a formal offer and acceptance. Emojis can particularly muddy the waters regarding intent.

• “Subject to Contract” Clauses: If the text messages indicate that the agreement is preliminary and subject to a more formal written contract being executed, then the texts themselves are generally not binding.

Example: “Okay, we agree on the main points via text, but this is all subject to a formal written agreement drafted by our lawyers.”

• Statute of Frauds: Certain types of contracts are required by law (under what’s known as the “Statute of Frauds”) to be in writing and signed to be enforceable. While ESIGN and UETA allow electronic records to satisfy the “writing” requirement, the specific details and level of formality needed can be higher for these contracts. Examples often include:
  • Contracts for the sale of real estate.
  • Contracts that cannot be performed within one year.
  • Contracts for the sale of goods above a certain value (e.g., $500 under the Uniform Commercial Code).

While a text might sometimes meet these requirements, courts will scrutinize them very carefully.

• Lack of Intent to Be Legally Bound: If the conversation suggests that the parties were merely negotiating, exploring options, or joking, a court is unlikely to find an intent to create a legally binding agreement. The overall context matters immensely.

Example: If two friends are brainstorming a business idea via text, those initial messages are unlikely to form a contract to start a business.

Ultimately, the more informal, ambiguous, or preliminary the text exchange, the less likely it is to be considered a binding contract.

Tips to Ensure Your Text Agreements Hold Up Legally

Understanding that text messages can be legally binding has practical implications for both everyday life and business operations. Awareness and careful communication are essential to avoid unintended commitments and protect your interests.

Here are some best practices to consider:

For Individuals:

• Be Mindful of Your Words: Remember that even casual texts discussing agreements could potentially be seen as forming a contract if the elements are present. Choose your words carefully, especially when money, goods, or services are involved.
• Confirm Important Agreements Formally: For anything significant (e.g., a loan to a friend, terms for a freelance project), follow up a text discussion with an email summary or a simple written agreement. This creates a clearer record.
• Clearly State Non-Binding Intent: If you are just brainstorming or negotiating via text and do not intend to be bound by the texts themselves, explicitly say so. Phrases like “This is just a discussion, not an agreement” or “This is subject to a formal contract” can be helpful.
• Save Important Texts: If you think a text exchange might be important later, don’t delete it. Take screenshots and, if possible, back up your phone.

For Businesses:

• Establish Clear Communication Policies: Develop and implement policies regarding the use of text messages (and other informal channels like WhatsApp or Slack) for business communications, especially those involving negotiations, offers, and agreements.
• Implement Robust Record-Keeping: Ensure that business-related text messages are preserved, especially in regulated industries. This might involve specialized software or procedures. Failure to do so can lead to significant penalties, as seen with SEC fines. Managing these diverse communication streams can be challenging, which is why many organizations turn to comprehensive solutions. For instance, an AI-Native CLM platform like Sirion can help centralize and manage all contract-related documents and communications, offering better visibility and control, even if initial discussions occurred on less formal channels.
• Use Formal Contracts for Significant Agreements: While a text might be binding, it’s always best practice to use formal, written contracts for important business deals. These documents are designed to be clear, comprehensive, and legally sound. Sirion’s platform can streamline the creation, negotiation, and management of these formal contracts.
• Train Employees: Educate employees on the potential legal implications of their text messages and the company’s policies. They need to understand the risks of making casual commitments that could bind the company.

By adopting these practices, both individuals and businesses can navigate the use of text messages more safely and effectively.

While texts can sometimes form valid contracts, they’re not designed for clarity, consistency, or compliance tracking. That’s why businesses—especially those operating in regulated industries or handling high volumes of contracts—need to move conversations from informal threads into structured systems designed for contract lifecycle management (CLM).

Managing Informal Agreements with CLM Software 

In an increasingly digital business landscape, agreements don’t always start with formal paperwork—they often begin with an email thread, a Slack message, or even a text. While some of these communications may hold legal weight, they lack the traceability, approval workflows, and audit readiness that enterprise-grade contract management demands.

That’s where a CLM platform like Sirion plays a crucial role. Sirion helps organizations:

• Consolidate fragmented conversations into a central, searchable repository.
• Capture and escalate informal agreements into standardized workflows for legal vetting and formal execution.
• Track versions and intent, ensuring that pre-signature discussions via texts or chats don’t bypass due process or introduce compliance risks.

By bringing even loosely formed agreements into a governed lifecycle, CLM tools help businesses reduce legal exposure, increase visibility, and maintain auditability—no matter where the conversation began.

Curious how to bring informal agreements into a secure and compliant contract process? Learn how Sirion helps businesses move from scattered communication to structured contract governance.

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Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Laws regarding contracts and electronic communications can be complex and vary by jurisdiction. You should consult with a qualified legal professional for advice regarding your specific situation.

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