Think Twice Before You Click Send!

E-mail emerged as an informal and humble means of electronic global communication. Now ubiquitous in business communications and transactions, e-mail is on the verge of becoming a key mover and shaker of modern day contract law.

One of the most important features of a contract is offer and acceptance, which is often referred to as a “meeting of the minds.” To render a contract enforceable, the parties involved have to intend to be bound by their agreement the moment the contract is formed. The courts generally use an objective perspective to determine if there was such an intention. This means that it is only necessary that the parties give the impression of offering or accepting contractual terms in the eyes of a reasonable and objective bystander.

In several recent decisions, courts have ruled that e-mail communications have the possibility of being construed as an enforceable contract. Of particular interest is an Alberta case from earlier this year, Leoppky v. Meston, 2008 ABQB 45 (CanLII). In this case, an unmarried couple purchased a home in joint tenancy. When they decided to split, they attempted to negotiate a settlement with regards to the home including all furnishings and improvements. The respondent (Leoppky) submitted that everything in issue was resolved by an agreement that was partially performed and that the appellant (Meston) later refused to honour the agreement. The negotiations, including correspondence with a friend who acted as a mediator, were conducted via e-mail. The appellant denied that any agreement was reached, but the court held that the string of e-mails formed an enforceable agreement between the parties. 

In reaching this decision, the court looked to the appellant’s initial e-mail that would constitute an offer as well as subsequent correspondence that made it clear that the respondent accepted the offer. Two e-mails sent by the appellant to the respondent on two different dates also confirmed that an agreement had been reached. In the former, the appellant states that “William and I have reached an agreement”. In the latter, the appellant’s calculations seem clearly to be based upon an agreed-to value for the house of $365,000. Based on these material facts, a reasonable objective bystander would conclude that the parties had reached a “meeting of the minds.”

In addition, the court also considered whether the e-mail correspondence was sufficient to comply with the requirements established in the Statute of Frauds. The requirement that an agreement dealing with the sale of land must be in writing was held to have been fulfilled. The court based this decision on definitions of the word “writing” in the Alberta Interpretation Act as well as the now repealed Ontario Interpretation Act. The court also looked to previous decisions where it was held that electronic correspondence would satisfy the requirements of writing: Holler v. D’Amboise (1983), 2 C.L.R. 18 (Ont.H.C.), Newbridge Networks Corp., Re, 48 O.R. (3d) 47, and Re RealNetworks, Inc., Privacy Litigation, No. 00 C 1366, 2000 WL 631341. The requirement that the writing be signed by the party ‘so devising’ the land was also held to have been fulfilled. The court arrived at this decision by looking to Newbridge Networks Corp., Re, 48 O.R. (3d) 47, where the court commented that what is intended to be the signature is a device whereby the “signer” can confirm to the intended recipient that he or she is advising to the choice selected (in the situation of electronic signatures for the purpose of shareholder voting). All of the appellant’s e-mails were signed “January” and she did not argue that the signatures were not hers.

In summary, if an e-mail or chain of e-mails clearly indicates an offer along with all material terms and the other party accepts these terms by e-mail in response, then it is likely that the e-mail correspondence can be construed as a valid enforceable contract — even though no signatures by hand have been exchanged. Because of this, it is important to use e-mail with caution in these sorts of settings. If the e-mail correspondence is intended only to be a part of negotiations that will lead up to a formal, written and signed document, it is imperative to expressly say so in the chain of e-mails.

The emergence of the internet and e-mail has been the catalyst for new legislation. For example, in 2000, the United States passed its Electronic Signatures in Global and National Commerce Act and Ontario similarly passed its Electronic Commerce Act in 2000 as well. While these acts do not deal expressly with contracts formed via e-mail correspondence, the prevalence of contract case-law regarding this issue shows that judges are ready to adapt to changing times and technologies. 

  1. This is a set of interesting decisions and I think they should be commended for allowing the law to (in Adrienne’s words) “adapt to changing times and technologies.” The internet and email communication are no longer the radical items that they may have been 10 or 15 years ago. Individuals and businesses rely on email as a tool of efficiency to perform tasks ranging from the mundane through to the complex. Were judges (and legislatures) not prepared to recognize email as a legitimate and meaningful form of communication, agreements and intentions expressed over email could become of negligible value. That would be a poor reflection of the value email communication has come to have in modern times.

    Of course, Adrienne’s cautionary title is a great reminder of the personal impact technology can have, especially since the ability to bind oneself is much simpler in the age of the Blackberry and iPhone. The flippant remark or agreement sent through these devices (and maybe even a string of text messages?) can bind the sender much easier today than in times past.

  2. I think the warning underlying both the post and Jonathan’s comment indicates a concerning problem in all of this. The use of newer communications technologies should not make contract formation any easier (easier being distinguished from more convenient).

    If communication over a given technology tends to be more fluid, conversational, or used more carelessly, it should ultimately weigh against a determination that there’s been a ‘meeting of the minds’. If we start noticing that it is indeed becoming easier to enter into contracts with less intent to be bound by them then I think it indicates that courts need to reassess how they are considering the various factors. However, I don’t know that any Canadian case law has actually gone too far at this point.

    Don’t get me wrong, the law should, and clearly has, recognized electronic forms of contract and electronic signatures. But the same principle of technological neutrality that says that both should be recognized also means that contract formation shouldn’t be any easier or harder.

    In fairness though, I guess there could be an increase in contracts being recognized as the result of evidentiary improvements brought on by new technologies (more likely to have stored a viewable copy of what was ‘said’).

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