When is a letter legally binding?

UPDATED: Oct 1, 2022

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When is a letter legally binding?

I received a letter from my mortgage company which in part states that if I wish, I can have my overpayment wired to my bank account. The letter contains the company logo, current date as of 3 days ago, and my personal info including my account. When I called the company, I was informed by one of their associates, that the company does not do wire transfers. Is their letter to me legally binding ?

Asked on July 25, 2018 under Business Law, Alabama


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

A letter is only legally binding if it formed an actual contract. To form a contract, not only must they be promising something to you, but you need to also promise something of value to them in the same piece of writing. That is, each side must receive "consideration":a promise or thing of value. Without a mutual (from each side to the other) exchange of consideration, no contract is formed; and any offer or promise not contained in a contract is a "gratuitious" (freely made) promise which can be rescinded, reneged, or dishonored at will by the person or business making it.
In the letter you describe, there is no consideration being extended from you to them; hence, the letter did not form a contract and is therefore unenforceable.

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