Chances are you shoot off a lot of instant messages throughout the course of the day. And if you don’t, your workers certainly do. Be careful: Legally, those instant messages are legally binding when it comes to altering contracts with other companies.
A huge jump in sales
CX Digital Media, Inc. provided marketing leads and advertising for Smoking Everywhere, Inc.
In August, 2009, CX Digital delivered less than 200 sales a day to Smoking Everywhere. The marketing company charged about $25,000 for those sales.
A month later, CX Digital was averaging more than 1,200 sales per day and submitted a bill for $1.3 million.
Smoking Everywhere refused to pay. According to the contract the two companies signed, CX Digital would only provide 200 leads a day and only drive potential customers to Smoking Everywhere’s main website.
To generate the extra sales, CX Digital started pursuing more leads and pushing traffic to multiple urls on Smoking Everywhere’s site. That constituted a breach of contract, Smoking Everywhere argued. But CX Digital said the two firms had changed the terms of the contract.
‘Awesome’ IM costs company $1.2 million
How exactly where the terms changed? CX Digital said it happened during an online instant messaging conversation between Nick Touris of Smoking Everywhere and CX Digital Account Manager Pedram Soltani.
Here’s that conversation:
pedramcx (2:49:45 PM): A few of our big guys are really excited about the new page and they’re ready to run it
pedracx (2:50:08 PM): We can do 2000 orders/day by Friday if I have your blessing
pedramcx (2:50:39 PM): You also have to find some way to get the Sub IDs working
pedramcx (2:52:13 PM): those 2000 leads are going to be generated by our best affiliate and he’s legit
nicktouris (3:42:42 PM): I am away from my computer right now.
pedramcx (4:07:57 PM): And I want the AOR [agent of record] when we make your offer #1 on the network
nicktouris (4:43:09 PM): NO LIMIT
pedramcx (4:43:21 PM): awesome!
That ‘awesome’ reply ended up costing Smoking Everywhere more than a million dollars.
IMs constituted assent
In the resulting lawsuit, the court held that the contract could be changed “wholly or partly by written or spoken words or by other acts or by failure to act.”
Based on the content of the online conversation, the changes to the agreement held up.
Keeping contracts on your terms
The lessons from this case are two-fold:
- 1. Make sure you know exactly what it takes for either party to change the terms of a contract. Avoid boilerplate contracts where this could be unclear. Work with legal experts to develop a contract that meets the specific needs of your arrangement.
- 2. Make sure employees at all levels of your business understand what is — and isn’t — acceptable to discuss via instant message, email, social media etc.
If your company is being sued for breach of contract in Pennsylvania, our business attorneys can help. Contact us today for an immediate consultation with our experienced legal team.