The Evolution of Contract Acceptance in the Digital Age

The recent Saskatchewan King’s Bench decision of South West Terminal Ltd. v Achter Land & Cattle Ltd., 2023 SKKB 116 has made national Canadian news, being the first of its kind regarding core contract interpretation principles – a thumbs-up emoji can signify acceptance of the terms of a contract and form a legally binding agreement.

In this case, the Plaintiff corporation, South West Terminal Limited, claimed it entered into a delivery purchase contract for flax with the Defendant, Achter Land & Cattle Limited. Achter never delivered up the flax and therefore South West claimed Achter breached the contract and then sued for damages.

The principal issue proposed by the Defendant is that there was no meeting of the minds respecting the foundation of the contract. A common principle in contract law is that a contract is only formed where there is an offer by one party that is accepted by the other with the intention of creating a legal relationship and supported by consideration.[1] “Consideration” is usually deemed as it sounds – the parties thought about, and understood, what the agreement meant.

A very common issue where there are allegations of a contract breach is that one party will state that terms within the contract are not what they agreed to. The legal test when a court decides whether an agreement did exist, is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract.[2] This means the judge will review the evidence, as would an objective third party, and consider not only the terms, but other related factors. Courts are not restricted to the contract itself but can consider surrounding circumstances.

In this case, the Plaintiff and Defendant had discussions about the purchase price of flax for a deferred delivery contract. The Plaintiff drew up a contract, signed it, then sent a photo of the contract to the Defendant and said: “Please confirm flax contract”. The Defendant texted back a thumbs up emoji.

The Defendant claimed the thumbs-up emoji signified receipt of the contract, but not necessarily that there was an agreement to the terms. Justice Keene stated that the Defendant’s understanding is not the legal test, but instead, we must consider what the ‘informed objective bystander would understand’.

Justice Keene considered the dictionary.com definition of a thumbs up emoji, meaning that it “is used to express assent, approval or encouragement in digital communications…”. The Defendant could not claim that the thumbs-up had instead meant that he had received the contract, when the Plaintiff had specifically asked “Please confirm flax contract”. Perhaps an ‘informed objective bystander’ would accept the Defendant’s version had the Plaintiff asked, “Please confirm receipt of contract”. The signed contract was the offer, and the thumbs-up emoji response indicated an acceptance of that contract.

The Defendant argued that allowing a simple thumbs-up emoji to signify contract acceptance would “open up the flood gates to allow all sorts of cases coming forward asking for interpretations as to what various different emojis mean”, such as a handshake or fist-bump emoji. This ‘floodgates’ argument is not uncommon. Justice Keene noted that despite this finding being novel in Saskatchewan, the Court cannot and should not “attempt to step the tide of technology and common usage”.

Justice Keene did what all judges do when considering whether a contract was formed: he considered the contract itself and the factual circumstances surrounding its formation (called the “factual matrix”). The floodgates argument was not accepted. These parties in the past had previously created contracts between them in a similar fashion, the only difference for this contract was the use of an emoji response versus the use of an “okay”, “good”, or “accept”, all of which are arguably synonymous with an average individual’s interpretation of a thumbs-up emoji.

Though this case is the first of its kind, it does not mean that a thumbs-up emoji response to a contract will always mean that a valid legal obligation has been created – what the case tells us is that it could, in conjunction with the surrounding circumstances. Courts will always consider the factual matrix in determining the validity of a contract and whether it has been breached.

 

[1] Orthodox Tewahedo Church of Canada St. Mary Cathedral v Aga, 2021 SCC 222 at para 35 [Aga].

[2] Aga at para 37.

Contacting a Lawyer on this Subject

The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations. Contact Tessa Wall at 1-306-933-1368 or t.wall@rslaw.com

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I have a business idea, now what?

I have a business idea… Now what?

So, you have an idea and are ready to launch a business. What do you do next? You can start by reading this article. Below are a few things to consider when you are looking to start your own business:

 

1) Determine how you want to structure your business:

There are several ways to structure a business. The three basic ways are though a sole proprietorship, a partnership, or a corporation. Each of these structures have different legal characteristics and are treated differently from a tax perspective. These structures are briefly described below:

Sole Proprietorship: A sole proprietorship exists whenever an individual engages in business in his or her own capacity. All benefits and liabilities of the business are also the benefits and liability of the sole proprietor. Therefore, the sole proprietor is personally responsible for all of the obligations of the business and is liable for any wrongdoing of the business. On the other hand, it is generally less costly to operate a sole proprietorship.

Partnership: A partnership is a form of business organization where multiple persons carry on a business in common with a view of profit. A partnership is not a legal entity separate from its partners and, generally, each partner in the firm is jointly liable with the other partners for all debts and liabilities of the firm. The legal relationship between partners is often governed by a partnership agreement.

In Saskatchewan, there is also the ability to create a limited partnership, which is a form of partnership that provides limited liability to certain partners. A limited partnership consists of one or more persons or entities who are “general partners” and one of more persons who are “limited partners”. Only the general partner is liable for the obligations of the partnership, and the limited partners have no liability beyond the amounts they contribute to capital. However, in exchange for this limited liability, the limited partners must be passive investors and cannot take part in the management of the business.

Corporation: A corporation is a legal entity separate from its shareholders and the individuals who operate the business of the corporation. Some advantages of operating a business through a corporation include limited liability to shareholders (in other words, the shareholders are not liable for the obligations of the corporation) and advantageous tax treatment.

The above is only a brief overview of these business structures. Before making a decision on which structure is best, it is advisable that prospective business owners discuss each structure in detail with their legal and tax advisors.

 

2) Reserve and register the business name:

If you wish to operate your business under a business name, there is a specific process that must be followed to search the name (to ensure another business is not using the same or similar name), reserve the name, and register the name in the appropriate public registry.

 

3) Obtain a Provincial Sales Tax (PST) Number

All business operating in Saskatchewan must be registered with the Ministry of Finance to obtain a PST number. PST must be collected and remitted by a vendor of a retail sale of certain property or certain services in Saskatchewan, and failure to do so may result in a large tax bill along with interest and penalty payments.

 

4) Register with the Saskatchewan Worker’s Compensation Board (the “WCB”)

All employers engaged in any industry in Saskatchewan (except farming/ranching or any other prescribed industries) who hire workers an a regular, casual or contractual basis must register with the WCB. Employers in Saskatchewan who are subject to workers’ compensation legislation must report work-related injuries that require medical attention to the WCB and pay assessed amounts to the WCB.

 

5) Review land use and zoning bylaws

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6) Obtain the appropriate business licence

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Starting your own business can be daunting, but the legal advisors at Robertson Stromberg LLP can help you navigate through these steps and get your business off to a great start.

 

For more information, please contact Jon Ponath at 306.933.1365 or [email protected]

COVID-19: Information for Employers

Candice Grant has supplied a handout for employers giving them useful tips on how to manage the workplace during the Covid-19 pandemic.

Introduction

As an employer, you may have concerns about how to manage your business and protect the health and safety of your employees during the COVID-19 pandemic. Below, we have addressed some of the common questions we have heard from employers. This information, which is current as of the date of publication (March 13, 2020), is not legal advice and we recommend consulting with your legal advisors for advice which is specific to your business.

Occupational Health and Safety

The Saskatchewan Employment Act imposes upon every employer an obligation to ensure, insofar as is reasonably practicable, the health, safety and welfare at work of all of the employer’s workers. This obligation includes a requirement to take reasonable preventative steps to ensure that the health, safety and welfare of employees is not harmed by an infectious disease such as COVID-19 in the course of their employment.

What constitutes “reasonable” steps will depend on the nature of the workplace (for instance, whether the employees interact with members of the public, whether tools or electronics are shared with other workers, whether employees have an ability to work remotely). An employer should carefully consider the potential sources of risk to employees in the course of their work, and what reasonable steps might be taken to alleviate those risks.

Employers may find it helpful to have a robust and comprehensive policy which outlines the responses that the organization will take in response to a pandemic.

Refusal to Work

Workers in Saskatchewan have the right to refuse to perform unsafe work if the employee has reasonable grounds to believe that the work is unusually dangerous to their health or safety (or the health or safety of any other person at the place of employment).

Any claim by an employee that it is unsafe to work is a serious matter which must be investigated by the employer. As indicated above, the employer must take all reasonable measures to protect the health and safety of its employees. It is not yet clear whether employees in Saskatchewan may be justified in refusing work because of potential for exposure to COVID-19. In the meantime, employers are encouraged to work with their employees to find solutions which address the employees’ concerns, while allowing the employer to continue to carry on business.

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Generally speaking, and as with any other illness, if an employee discloses that they are not feeling well or are showing symptoms which are consistent with COVID-19, it is reasonable for the employer to request that the employee refrain from reporting to work until they are well. In addition, the employer should have regard for the latest provincial and federal directions regarding the self-isolation of employees who have travelled or been in contact with others who may have been exposed. In some cases, it may be possible to allow the employee to work from home during a period of minor illness or self-isolation.

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For further information, please contact:

Candice D. Grant

Direct: 306.933.1304

Email: [email protected]

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Marinko Jelovic Joins Robertson Stromberg Partnership

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Whether it’s personal or business, we handle cases ranging from wills to overseeing complex business deals, and everything in between. Our success comes as a result of our collective effort. Combining the experience of your lawyer together with the resources of our team, you can put your trust in us to handle your case with confidence.

Area of ExpertiseSmall Business