I don’t normally mention court cases in this blog but I will today because it affects something we do every day – sending email. In this case, the Supreme Court of Queensland ruled that a series of email communications involving the sale of a business amounted to a binding contract. It did so because it found that the communications involved fulfilled the necessary prerequisites to a contract – that there was an:
- Offer;
- Acceptance;
- Clear agreement as to the material terms of the contract;
- Intention (objective intention) by both parties to be legally bound.
The Facts
Essentially, two parties entered into negotiations for the sale of a business. They exchanged many emails containing a great deal of information about the proposed sale, for example, the terms, price, deposit, stock, settlement and so forth. Once all these issues were hashed out, the purchasers (Stellard Pty Ltd and Sharmen Pty Ltd) sent an email to the Seller offering to buy the business “subject to contract.” The Seller (North Queensland Fuel Pty Ltd) replied by email that the offer was accepted “subject to the execution of the contract.” The parties did not execute the Sales Contract and the Seller pulled out of the deal. The Buyers took the matter to court and the Judge ruled that the email correspondence exchanged between the parties did constitute a binding contract. This case offers us some food for thought, particularly if you are in the business of negotiating on the sale or purchase of businesses or real estate, transacting leasing, setting up a joint venture or employing a new staff member. In reality, it can affect any type of negotiations if you are meeting all the criteria for a contract.
What about other electronic communication?
This landmark decision sets a precedent for email but could also affect other forms of electronic written communication like Skype, texts or instant messaging. They’re no longer a flippant or less permanent record than hard copy – what you write electronically could have legal ramifications in the future Make it a habit to start treating all your business written electronic communication as you would a hard copy letter; if you wouldn’t write it on paper, then don’t put it in an email. Bearing this in mind, it makes sense to slow down and be careful about the language you use in your messages – are you really saying what you mean? And remember to re-read what you have written before you hit ‘send.’ If you’re interested in the detail of this landmark decision, go here.
