BACKGROUND
In June a Saskatchewan court released a decision stating that a thumbs up emoji “👍” in a text response was an acceptable means of confirmation to form a binding contract. In the context of the relationship between the parties, their past practice and the circumstances presented to the court, the judge gave the thumbs up to the plaintiff's argument that the defendant accepted the contract presented to him by text message. While there have been many snappy headlines regarding this decision, it was based on sound reasoning and followed established law.
THE “📠”
The case deals with a dispute between Southwest Terminal Ltd. who was intending to purchase flax from Achter Land and Cattle Ltd. - two parties with a history of successfully completing various deferred grain purchase transactions.
In March 2021, a representative for Southwest sent out a general text to their producer contacts offering to buy flax at a set price. After that text message, Achter and a representative from Southwest had a call to further discuss the purchase, a representative for Southwest printed out the contract, signed it, took a photo, and texted it to Achter along with the message: “please confirm flax contract”. Achter then texted back “👍”.
Achter failed to deliver the flax and Southwest subsequently purchased the flax at a higher price and sued Achter for the difference.
CONTRACT FORMATION
While the court explored other issues in the decision, the main focus was on the fundamentals of contract formation. If this feels like Contracts 💯 + 1(”101”), that's because it is. Generally, the courts require four basic parts to recognize a contract. An offer by one party, acceptance by another, the intention to be legally bound, and some form of consideration (a 🌶 🌽, for example). The court then judges whether or not a contract is formed by asking if a bystander, aware of all of the surrounding circumstances, would think a contract has been formed.
In the circumstances, Southwest and Achter had established a pattern of offer and acceptance in their previous dealings. Southwest would send a picture of an agreement by text and ask Achter to confirm the terms and Achter provided short responses such as “looks good”, “yup” or “ok”. The parties would then treat this as a contract and the grain would be delivered and paid for each time. If a one word response such as “ok” forms a contract, they why not “👍”?
YOURS TRULY, 👍
The decision discussed whether the “👍” was generally understood to mean yes (it is - the transcript of the deposition and cross-examination is 😂 and worth the read) and decided that it was clearly as acceptable as previous responses. Achter claimed that 👍 was merely an acknowledgement that the contract had been received and was not meant to indicate acceptance. The court called this claim a “🍰 and eat it situation”, since Achter agreed that the thumbs up has an affirmative meaning, but not the one that would bind them to the contract.
In Saskatchewan, like other Canadian jurisdictions, The Electronic Information and Documents Act allows for electronic signatures noting that a contract will not be invalidated simply for the reason that a document in an electronic form was used in its formation. It also states that contracts can be formed by an “action in electronic form”. The law is fairly clear on this point and in this case, “👍” was deemed to be such an action. The judge also acknowledged that while the 👍 emoji is not a traditional way to sign a contract, when all the circumstances are considered, it is a valid way to convey a signature.
🚶♂️⏩ (“ going forward”)
Based on this decision, it seems that text messages can be enforceable vehicles for validly formed contracts. However, it does open the possibility to a few interesting scenarios for a Contracts 101 exam:
Can a contract be validly formed by sending memes? How about gifs?
Can a contract term be varied, amended or changed by a well-understood meme or gif?
Do I need to invest in an emoji glossary?
Do you call 🐂💩 on this decision?
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