January 12th 2008

It's a classic he-said, she-said case that ends up in court on a daily basis…

Widget buyer Ms. Robinson testified that Mr. Smith, the Widgets Ltd. sales manager,told her that if she put her order in immediately,the price would be discounted by 20 percent. Mr. Smith argued that that was not what he said. According to his testimony, he agreed to give a 20 percent discount only if Ms. Robinson ordered at least one million widgets, which she did not. The widgets were manufactured anddelivered, and the client was billed for the full amount. The client is refusing to pay the full amount and the manufacturing company is throwing it to a debt collection agency. If brought into court, who would be right?

Provided that neither party can produce a signed contract to back up their case, there is no way of knowing who is right.

However, let's suppose Ms. Robinson produces an e-mail she sent to her boss copying Mr. Smith that says, “I made a deal with Mr. Smith, the sales manager at Widgets Ltd., to get a 20 percent discount for 500,000 widgets ordered." Let’s also suppose Mr. Smith cannot produce any e-mails, contracts, or memos to the contrary. Now the chances of Ms. Robinson winning her case go up exponentially. When faced with two credible witnesses whose recollection of an event or agreement are in dispute, the court is most likely to favour the person who has corroborating documentation to support their side of the story.

E-mail has Become the Primary Means of Communication and Negotiation

In the not too distant past, business people would communicate primarily through face-to-face meetings, telephone conversations, faxes, and the occasional paper document. When a "my word against your word" dispute arose, a court case could be awarded to the person who seemed more confident or credible.

Nowadays, e-mail has become the default mode of communication. It’s very common for a buyer to communicate to a seller entirely by e-mail. Transactions are done without the two ever meeting and in some cases, never speaking. As a result, the "my word against your word" conundrum becomes more of a contest between e-mails, as opposed to a competition between the memories of the people involved.

The upside of this situation is that if you can produce an e-mail that supports your version of the facts, you have a leg up if it goes to court. The downside is that most people are careless about what they say in an e-mail. They don’t think about it ending up as an exhibit in a courtroom under close scrutiny leaving them with the only explanation, "I know that's what I said, but that's not what I meant.”

Food Service Company Awarded £1.25 Million Thanks To A Few “Innocent” E-mails

*Example: A food service company was contracted to provide all meals at 48 nursing homes.Ultimately, the food service company claimed that it was underpaid over £1 million and sued in court. The director of the nursing home company claimed that the food service company had made certain oral cost guarantees that were not honoured, thereby justifying the underpayments. However, a detailed review of the nursing home company's internal e-mails revealed that its executives had "privately" expressed substantial doubt about the supposed oral guarantees. The e-mails were given to the jury, which awarded the food service company £1.25 million.

What Should You Do To Protect Yourself? The most important thing you can do is think twice before hitting “send.” If you are a manager or employer, train your employees to be careful about what they communicate via e-mail and constantly remind them of the dangers. Once an e-mail is sent, you cannot get it back. Another good practice is having a system for archiving and managing e-mail communications. This goes double for certain companies because of regulations set out in the Companies (Audit, Investigations and Community Enterprise) Act of 2004.

We highly recommend keeping backups of all incoming and outgoing email, and structuring your email folders so that historical emails can easily be located.