CONTRACTS: ELECTRONIC SIGNATURES, WET-INK SIGNATURES AND NOW EMOJIS!!! 👍
Updated: Jul 20
Technology is rapidly evolving, and within that, the way we communicate is too. Whether it’s an abbreviated message, acronyms or emoji’s, traditional ways of communicating are changing, which leaves the procedure for executing legal documents to catch up.
Many overseas jurisdictions stand by the more traditional route for executing commercial agreements by way of a wet-ink signature or more recently a qualified electronic signature. In the UK, e-signatures are common, and arguably the preferred execution method for speed and ease. The general view is that an electronic signature is in most cases, in the absence of any specific legal requirements, sufficient to evidence a binding contract.
A Canadian Judge has taken the issue of whether a contract has been validly created one step further, with a pragmatic approach which recognised that other forms of executing legal documents can be adopted. In this case, the issue was whether an emoji could create a legally binding contract. The approach taken was whether a reasonable and objective bystander would consider the emoji as a reasonable form of acceptance to enter into a contract. The Judge ruled that the 👍 emoji was just as valid as a signature.
This raises the following questions - Are you familiar with the formalities that make up a contract? OR Have you entered into a contract unknowingly?
HOW DID THE JUDGE ARRIVE AT THEIR DECISION?
The case in question related to the sale and purchase of grain.
South West Terminal Ltd (“SWT”), was the buyer and is a grain and crop inputs company. The seller was Achter Land & Cattle Ltd (“Achter”), a farming corporation owned and operated by Chris Achter, a representative of Achter. Bob Achter is Chris’ father. Since 2012, SWT has purchased grain from Achter through deferred delivery contracts.
On 26 March 2021, Kent Mickleborough, a representative of SWT, sent a text message regarding flax prices to various producers, including Bob and Chris. On receiving the text message, Bob called Mr Mickleborough and expressed interest on behalf of Achter. Mr Mickleborough called Chris who confirmed his intention to enter into a contract. They both agreed that once Chris received the contract via text message he would confirm the deal was agreed. It was a term of the contract for Achter to sell SWT 86 metric tonnes of flax at a price of $17.00 per bushel amounting to $669.26 per tonne to be delivered in November. Mr Mickleborough applied his wet-ink signature to the contract, took a photo of the contract and texted the photo to Chris’ phone with a supporting text message, “Please confirm flax contract”. Chris responded to Mr Mickleborough with “👍”.
On 01 November 2021, Achter Ltd failed to fulfil the terms of the contract.
On 30 November 2021, the price of flax increased to $41.00 per bushel which amounted to $1,614.09 per tonne, leaving SWT faced with a significant financial deficit.
SWT brought a claim for breach of contract.
WHAT DID THE PARTIES ARGUE?
SWT asserted that during the longstanding business relationship with Achter, contracts would typically be negotiated and agreed through email or text message. SWT relied upon previous negotiations and agreements during the course of 2020 and 2021, where SWT texted Achter with a photo of a signed contract and a supporting text message to confirm the terms of the contracts. Achter usually responded to these text messages with “Looks good”, “Ok”, and “Yup”. On all occasions, SWT understood that this was Achter’s way of agreeing to the terms of the agreement as Achter had always delivered on these contracts without issue.
Achter disagreed, arguing that the 👍emoji confirmed it had received the contract; it was not however confirmation that the terms had been agreed. Instead, Achter relied on the statutory defence available in Canada that there was no note or memorandum of the contract signed by the parties.
WHAT DID THE COURT SAY?
The Judge ruled in favour of SWT and found that on the balance of probabilities, Achter approved the contract; reliance was placed on similar historical course of dealings. The Judge also used the dictionary definition to interpret the meaning of the emoji. Interestingly, the meaning of the thumbs up emoji is “used to express assent, approval, or encouragement in digital communications, especially in Western cultures.” In conclusion, the Judge stated that a reasonable bystander knowing the facts of the case would conclude that the parties had a meeting of minds and ruled that the👍emoji was an “action in electronic form” and therefore created a valid contract. Achter was found to be in breach of contract and damages for $82,200 (approximately £50,000) was awarded to SWT.
WHERE DOES IT LEAVE THE UK?
Emojis are here to stay and are used frequently in different jurisdictions across the world as a means of communication. Although an informal way of corresponding, the court in Canada has made it clear that the use of an emoji can create a legally binding contract.
What is clear from the Canadian court's decision is that the previous dealings and how SWT and Achter created binding contracts were factors taken into account by the court. While the decision is fact specific, it has clearly opened the door for the possibility of more informal means of communication, including emojis being used as evidence that a binding contract has been created. It is possible the courts here would also come to the same conclusion.
If you want to avoid your business falling foul of a similar situation, let our experienced commercial solicitors provide you with the tools to do so and minimise the risk of future disputes.
WELCOME TO A MORE CONFIDENT FUTURE!
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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.