When the Law needs to keep up with Technology – Part II

I came across this interesting post today. This is a US case where the court decided that an instant messenger (IM) exchange modified a contract, even though the contract had a clause that explicitly prohibited oral modifications. Among other reasons, the court held that the IM conversation was considered to not be oral as it was in “writing.” The contract in this particular case called for amendments that were in signed writing, but based on jurisdiction-specific laws, the court was able to circumvent the “signed” requirement and held that the IM conversation modified the contract.

Technically, the decision is right. Technically. The words were typed out, which is a form of “writing” them out – the IM conversation wasn’t oral. Going by this decision, nearly all of today’s online conversation could be considered “written” and not oral – and thus able to modify previously negotiated and signed contracts, even if those contracts called only for non-oral modifications. These communications include IM messages of course, but also other forms of conversation we don’t necessarily consider binding – tweets on Twitter, Facebook status updates, snippets on Foursquare. Essentially any sort of communication you type over the internet and to which the other party responds.

But how do people really use these new communication media? Most people I know use IM as a substitute for a phone conversation.  True, an IM conversation isn’t oral like a phone conversation, but it’s usually conducted with the same candor and informality that would accompany a similar phone conversation. With the expectation of the same consequences that a similar phone conversation would have. Consequences that contracts with “written-amendment” clauses were designed to prevent. Other social media communication are considered even less formal and more candid than IM conversations.

This case is an example of the law not keeping up with technology. As I’ve discussed before, it’s not only how technology works that matters,  but also what people’s expectations are of how and for what the technology is used. A casual conversation over IM should not bind you when you expect a formal, written agreement to follow.  However, this isn’t the first time, and it won’t be the last, that the court’s narrow view of today’s technology resulted in a decision that is inconsistent with how people actually use technology in their professional and personal lives.

Sapna Mahboobani is a business and technology lawyer and founder of Sapna Law. If you would like her to advice on your contracts and post-negotiation behaviour that could affect their effect,  you may contact her at sm@sapnalaw.com or use the contact page on this blog.

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About Sapna Law

I am a business and technology lawyer and founder of Sapna Law in Toronto, Canada. I work with tech companies at all stages - from start-up to well established, advising on corporate/commercial and technology law issues.
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