Many business owners operate under a seemingly straightforward assumption: no one is bound until a formal contract is signed.
That assumption can be costly.
Under New Jersey law, an enforceable agreement does not always require a lengthy contract, a signature or ceremonial closing. When the parties agree on the essential terms of a transaction and objectively demonstrate that they intend to be bound, an email exchange—or even a series of text messages—may be enough to create a contract.
A recent New Jersey Appellate Division decision provides an important reminder that the words used during negotiations matter.
A Settlement Reached by Email
In Weiss v. Investors Bank, an unpublished decision issued on April 14, 2026, the parties were preparing for trial in a dispute involving allegedly unpaid commercial real-estate brokerage commissions.
Before trial, they negotiated a settlement. Plaintiff then sent an email summarizing the proposed terms, including the settlement amount and method and timing of payment. Defense counsel responded with several clarifications, and plaintiff did not object.
The parties subsequently informed the court that they had reached a “settlement in principle” while they finalized the written documents.
A dispute arose after the proposed written agreement was circulated. Plaintiff attempted to add liquidated damages clause. The liquidated damages clause was not part of the earlier email exchange. When defendants rejected the revised proposal, plaintiff took the position that no binding settlement had been reached.
The trial court disagreed and enforced the settlement. The Appellate Division affirmed, concluding that the parties had agreed on the essential terms through their email communications and had objectively demonstrated an intent to be bound. The later preparation and execution of a formal settlement agreement were not necessary to create the contract.
Because Weiss is unpublished, it does not constitute binding precedent. Nevertheless, it illustrates how New Jersey courts analyze agreements reached through informal electronic communications.
The Contract May Exist Before the Document Does
New Jersey courts generally look for mutual assent: did the parties reach a common understanding concerning the agreement’s essential terms?
That inquiry focuses on what the parties said and did—not on a party’s unexpressed intentions. A person ordinarily cannot avoid an agreement by later claiming, “I did not think we were actually bound,” when the person’s communications and conduct indicated otherwise.
The parties also do not necessarily need to resolve every minor detail. When the essential terms are settled, a court may treat the parties’ later formal document as a memorialization of an existing agreement rather than a condition to the agreement’s formation.
In Weiss, the parties had identified the payment amount, the claims to be released, the relevant parties and the confidentiality requirement. The court determined that the remaining mechanics could be addressed in the formal documents. A party could not undo the deal by proposing a new material term after the agreement had already been reached.
Dangerous Words During Negotiations
Certain phrases can create unnecessary risk when used without qualification:
- “Agreed.”
- “Accepted.”
- “We have a deal.”
- “That works for us.”
- “Go ahead and begin.”
- “We will prepare the formal contract next week.”
Those statements may be viewed as objective evidence that an offer was accepted, particularly when the parties have already discussed the price, scope of work, payment terms, duration and other essential provisions.
Even communications described as a “letter of intent,” “term sheet” or “agreement in principle” can create uncertainty. A court will not necessarily rely exclusively on the title of the document. It may examine the language used, the completeness of the terms, the parties’ conduct and whether performance began.
The issue can become especially complicated when an email chain contains mixed signals. For example, one message may state that the parties have reached an agreement, while a later message says that no agreement will exist until a formal contract is signed. By then, the parties may already disagree over when—or whether—the deal became binding.
How Businesses Can Avoid Accidental Agreements
Business owners and executives should consider several precautions when negotiating through email or text.
First, clearly state when negotiations are nonbinding. Communications can specify that they are for discussion purposes only and do not create an obligation.
Second, make execution a clear condition. When appropriate, state that no agreement will exist unless and until a definitive written contract is approved and signed by all parties.
Third, avoid casual acceptance language. An unqualified “agreed” may carry more legal significance than the sender intended. A more careful response might acknowledge progress while expressly reserving final approval.
Fourth, identify who has authority to approve the transaction. Employees and representatives should understand whether they are authorized to accept terms on the company’s behalf.
Fifth, keep the communications consistent. A disclaimer in the first email may be undermined by later messages declaring that a deal has been reached or directing the other party to begin performing.
Finally, involve counsel before the deal appears complete. Legal review is most effective before the parties exchange language that may constitute an offer and acceptance—not after one side attempts to withdraw.
The Practical Lesson
Email and text messages may feel informal, but their legal consequences can be very real. The absence of a traditional signature does not necessarily mean that the parties remain free to walk away.
Before sending “agreed,” “accepted” or “we have a deal,” businesses should ask a simple question: are we prepared to be legally bound today?
When the answer is no, the communication should say so clearly.
To find out more about Boris Peyzner and his other areas of practice, click here.