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Monday, August 29, 2005

Lessons for E-Mail Modification of Contracts

The First Circuit's recent opinion in Campbell v. General Dynamics Government Systems Corp. illustrates the perils of attempting to use e-mail to amend an existing contract.  Arising in the employment context, General Dynamics sent a mass e-mail to all of its employees, announcing a new mandatory arbitration policy.  The new policy was to be effective beginning the following day.  When Campbell, a General Dynamics employee, filed an ADA lawsuit against his employer, General Dynamics moved to dismiss based on the arbitration policy.  The district court denied the motion, and the First Circuit affirmed, holding that the e-mail had not effectively amended the employment contract by adding the arbitration policy.

The First Circuit identified several problems with General Dynamics' attempted use of e-mail to amend the contract.  First, General Dynamics did not require any response to the mass e-mail announcing the policy, instead indicating that "no response was required."  The First Circuit took issue with this methodology:

One way that General Dynamics could have set this particular communication apart from the crowd would have been to require a response to the e-mail. Instead, the company opted for a 'no response required' format. Within the context of this particular employment relationship, in which significant personnel matters historically had been transacted via signed documents, this choice disguised the import of the communication. Signing an acknowledgment or, in a more modern context, clicking a box on a computer screen, are acts associated with entering into contracts. Requiring an affirmative response of that sort would have signaled that the Policy was contractual in nature.

This language, of course, is consistent with the general "clickwrap" line of cases which hold that clicking assent with a mouse is a valid means of manifesting contractual assent to a bargain.  The court also held, however, that the substantive content of the e-mail was lacking in contractual formality as well:

To be blunt, the e-mail announcement undersold the significance of the Policy and omitted the critical fact that it contained a mandatory arbitration agreement. The result was that a reasonable employee could read the e-mail announcement and conclude that the Policy presented an optional alternative to litigation rather than a mandatory replacement for it.

[Wayne Barnes]

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» CA1: Campbell v. General Dynamics discussed from Appellate Law
In the ContractsProf blog. See our coverage here. See the opinion here. (This is the case which holds that an emailed notice of a change in a contract was not good enough.) [Read More]

Tracked on Aug 29, 2005 6:57:15 PM