Southwest Update - Khoury v. Tomlinson

E-mail Acceptance Sufficient to Satisfy Statute of Frauds

In Khoury v. Tomlinson, 518 S.W. 3d 568 (Tex. App. -- Houston 1st Dist.), the court of appeals (the "court") held, among other things, that e-mail correspondence was sufficiently definite to give rise to an enforceable contract and that the entry of a party’s e-mail address in the “from” field of the e-mail was sufficient as a signature for purposes of satisfying the Statute of Frauds. 

John Khoury (“Khoury”) made a $400,000 loan to PetroGulf, Ltd. (“PetroGulf”), a company formed for the purpose of physically trading oil in certain middle-eastern markets.  When Khoury became dissatisfied with his investment, Prentis Tomlinson (“Tomlinson”), the president and CEO of PetroGulf, met with Khoury and agreed to personally repay the loan.  Shortly thereafter, Khoury sent an e-mail to Tomlinson summarizing the terms of the repayment, and Tomlinson responded to the e-mail saying “We are in agreement.”  When Tomlinson failed to make any of the promised payments, Khoury sued, alleging, among other things, breach of contract.  In his answer, Tomlinson asserted that any recovery on the breach of contract claim would be barred by the Statute of Frauds due to both the terms of the e-mail not being sufficiently definitive to represent a binding contract and due to the e-mail not being signed by Tomlinson.  The jury found in favor of Khoury on the breach of contract claim, but the trial court disregarded the jury’s finding of liability in response to Tomlinson’s motion for judgment notwithstanding the verdict.  On rehearing, the court reversed the trial court’s judgment.  In reaching its conclusion, the court determined that the terms proposed in Khoury’s e-mail were sufficiently detailed to sustain the jury’s original finding of liability for breach of contract. In response to Tomlinson’s assertion that the e-mail was not sufficient to satisfy the Statute of Frauds due to its not being signed by the person to be charged with the agreement, the court determined that entry of Tomlinson’s e-mail address in the “from” field of the e-mail satisfies the definition of a signature under existing law, and, together with Tomlinson’s statement that “We are in agreement”, evidences Tomlinson’s intent to be bound by the terms in the e-mail.