The Little Steel Company is a small steel fabricator that makes steel parts for various metal machine shop clients. When Little Steel Company receives an order from a client, it must locate and purchase 10 tons of a certain grade of steel to complete the order. The Little Steel Company sends an e- mail message to West Coast Steel Company, a large steel company, inquiring about the availability of 10 tons of the described grade of steel. The West Coast Steel Company replies by e- mail that it has available the required 10 tons of steel and quotes $ 450 per ton. The Little Steel Company's purchasing agent replies by e- mail that the Little Steel Company will purchase the 10 tons of described steel at the quoted price of $ 450 per ton. The e- mails are signed electronically by the Little Steel Company's purchasing agent and the selling agent of the West Coast Steel Company. When the steel arrives at the Little Steel Company's plant, the Little Steel Company rejects the shipment, claiming the defense of the Statute of Frauds. The West Coast Steel Company sues the Little Steel Company for damages. Who wins?
West Coast Steel Company wins. Contracts can be legally negotiated and completed by e-mail as long as they meet the requirements necessary to form a traditional contract. This includes capacity, lawful object, agreement, and consideration. The element of capacity is met because both parties are businesses, and the object of the contract, the purchase of steel, is a lawful object. Consideration exists because the buyer, Little Steel Company, would be paying money and West Coast Steel Company would be delivering steel. An agreement is reached by exchanging e-mails. Exchanging e-mails is an acceptable method of negotiating and entering into a sales agreement. Thus, the traditional elements of forming a contract are met by the exchange of e-mails between the parties. Little Steel Company’s bases its rejection of the shipment of steel by West Coast Steel Company by alleging the defense of the Statute of Frauds. Little Steel Company argues that an e-mail contract, which is electronic, is not in writing according to the Statute of Frauds and is therefore unenforceable. The U.S. Congress has enacted the Electronic Signatures in Global and National Commerce Act (E-SIGN Act). This federal law recognizes that electronic contracts meet the writing requirement of the Statute of Frauds. Thus, the contract can be enforced against Little Steel Company.