What’s Up Doc? A thumb! So what does it take for a text message to become a legally binding contract?
One of the first things you learn in law school (provided you’re paying attention) is that in order to have a contract, you need an offer, acceptance of the offer, and “consideration,” which is something of value that passes from one party to the other. There! The Doc just saved you thousands of dollars in law school tuition!
Well, not really…you see, the offer has to be definite and contain certain terms, such as an identification of the goods or services being offered, the price to be paid, and the timing, including when delivery will occur. The consideration also has to be specified, and it doesn’t just have to be money; it can be bartered goods, services, securities, or just about anything of value.
Now, about that acceptance. It has to be communicated clearly. Once there’s a contract, the law will provide a means for the parties to enforce the terms, and if the contract is breached, damages will be assessed.
It is said that an oral contract is not worth the paper that it’s not written on, but that’s not true. With some important exceptions, oral contracts are fully enforceable. It’s just harder to prove in court what the terms were.
One recent Canadian case (South West Terminal Ltd. v. Achter Land & Cattle Ltd.) caught the Doc’s eye. The plaintiff, South West Terminal Ltd (SWT), brought an action against the defendant, Achter Land & Cattle Ltd (Achter), for breach of contract after the defendant failed to deliver the goods provided for under the contract. The contract in dispute was executed on March 21, 2021, after a phone call between Chris Achter and Kent Mickelborough. During their discussion, Achter agreed to sell, and SWT decided to purchase 87 metric tonnes of flax for $17.00 per bushel ($669.26 per ton) to be delivered in November of that year. After the phone call, Mr. Mickelborough sent Mr. Achter a photo of the contract outlining the agreed-upon terms and asked him to confirm the flax contract. Mr. Achter responded with the “👍” emoji.
Later, Atcher argued in court that the emoji was simply to confirm that he’d received the photo of the contract, while Mickelborough argued that it was confirmation he was entering the agreement as the buyer also asked for confirmation on the contract along with the picture.
“This court readily acknowledges that a 👍 emoji is a non-traditional means to ‘sign’ a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a ‘signature’ – to identify the signator (Chris using his unique cell phone number) and as I have found above – to convey Achter’s acceptance of the flax contract,” Justice T.J. Keene wrote in the decision. “I therefore find that under these circumstances that the provisions of §6 of the [Sale of Goods Act] have been met and the flax contract is therefore enforceable. There is no issue in this regard that requires a trial.”
According to the background provided in the court decision, Atcher and Mickelborough had a long-standing business relationship, and in past agreements over purchases, Atcher would reply to Mickelborough’s request to confirm contracts with written responses like “Looks good” or “yup.” Justice Keene wrote that under the circumstances listed in the case, the thumbs-up emoji constituted an “action in an electronic form” that can be treated as acceptance of the contract. “This appears to be the new reality in Canadian society and courts will have to be ready to meet the new challenges that may arise from the use of emojis and the like,” wrote Justice Keene.
The Court ordered Achter Land & Cattle Ltd. to pay $82,200.21 in damages to SWT for breaching the flax contract. The damages reflect the difference between the contract price ($17.00 per bushel) and the market price ($41.00 per bushel) of the goods on the day the flax should have been delivered.
The Doc has not heard of a similar emoji contract in the United States, but it would not surprise him to see one any day now. So be careful about texting, lest you agree to a contract and find that you now have to deliver 87 metric tons of flax.
Have a question about legal agreements? Text (or email, or call) the attorneys at LW&H. They’ll shoot back a message without too many emojis.
Until next month,
— Lawrence A. Husick, Esq.