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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