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.