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Warning: Don’t use emojis when negotiating a contract !

In this edition of the bowers.law Room 228 Newsletter, we analyse and give our Top Tips following a Canadian Judge recently ruling that a thumbs-up emoji 👍 is just as good as a signature, can represent a contractual agreement, and so ordering the 👍 using party to pay for an unfulfilled contract. 

September, 2023

Here’s the link to our previous Room 228 Newsletter on a similar topic entitled: Dance like no one is watching, but text like it’ll be read out in court one day…

Background Facts

This recent Canadian case involved a buyer who was looking to buy 86 tonnes of flax for USD12.73 per bushel. The buyer spoke to the farmer and then texted a picture of a contract for the farmer to deliver the flax during November, asking the farmer to “please confirm flax contract” in the text message. The farmer then sent a text message to the buyer containing only a 👍. The farmer did not deliver the flax to the buyer during November, by which time the price for the flax had increased.

The buyer and the farmer disputed the meaning of the 👍. The buyer referred to previous contracts between the same two parties which had been confirmed by text messages, claiming that the emoji meant that the farmer was agreeing the terms of the contract. The farmer claimed that the emoji meant only that he had received the picture of the contract in the buyer’s text message. The farmer’s evidence was: “I deny that I accepted the thumbs-up emoji as a digital signature of the incomplete contract…I did not have time to review the flax contract and merely wanted to indicate that I did receive his text message“.

The Judge sided with the buyer and ordered the farmer to pay USD61,442 for the unfulfilled contract. In doing so, the Judge rejected the farmer’s argument that he was not an “expert in emojis” and (more significantly) that allowing the 👍 to signify contractual acceptance would open the floodgates to new interpretations of other emojis, including 🤜🤛 and 🤝. When ordering that 👍 can be used to conclude contracts and that an emoji is a non-traditional way to sign a contract, the Judge commented that the court “…cannot (nor should it) attempt to stem the tide of technology and common usage” of emojis, and “This appears to be the new reality in Canadian society and courts will have to be ready to meet the new challenges that may arise from the use of emojis and the like“.

Analysis

In holding that 👍 in a text message was a valid way to conclude a contract, the Judge appears to have discarded all (or at least some) of the traditional elements required for the formation of a binding enforceable contract:

  • valid offer and acceptance
  • consideration (money or money’s worth)
  • certainty of terms
  • intention to create legal relations
  • capacity to enter into a contract
  • legality of performance / lawful object
  • authority to enter into a contract
  • free consent to enter into a contract / no coercion
  • possibility of performance

Our view is that the Canadian court incorrectly ignored these traditional elements required for the formation of a contract and consequently, has opened the floodgates to a torrent of cases which will make it far easier for parties to claim the formation of a binding contracts without the safeguards afforded by those traditional elements, which exist for a reason – not to make it too easy for parties inadvertently to create contractual relations between them !

Comment

We have in the last few years acted on the following real-life cases in which parties have attempted to claim the formation of the following types of binding contracts (often worth up to several millions of USD) in sms, WhatsApp, WeChat, Telegram or Signal text messages – some with the use of 👍😊 ✅ or 🤝, and others with only a “yes” or “yup” or “ok“:

  • job offer / employment contract
  • annual salary pay rise / discretionary bonus
  • housing allowance
  • loans
  • loan guarantees
  • shareholders agreements
  • sale / purchase of commercial properties (tourist attraction, hotel etc)
  • sale / purchase of a residential property

Our case involving the sale / purchase of a very valuable commercial property (on The Peak in Hong Kong) concerned the buyer claiming that a 😊 in a sms text message sent to the seller constituted a binding acceptance of a sell offer and an agreement in writing for the buyer’s purchase of the property at a price which was by then 100s of millions of dollars less than the increased market price. Although this property dispute eventually settled without a determination by the court, we are confident that the Hong Kong court would have rejected the ☹️ buyer’s claim.

All of these so-called ‘contractual arrangements’ have one thing in common – all of them existed only in text messages on social media platforms without the creation of any formal contractual documentation (or the involvement of any external lawyers or legal advice).

By way of an aside, nearly all of the commercial disputes we now handle involve some kind of WhatsApp or WeChat element where one or both parties have used relaxed language in an informal text setting, which inevitably comes back to bite them ! Put this relaxed language on top of unilateral editing, encryption and disappearing message features, and you can see exactly why so much uncertainty surrounds the attempted formation of contracts in text messages on social media platforms.

Top Tip

Our bowers.law Top Tip is that these social media platforms should not be used to try to create contractual relationships as they will inevitably face very difficult issues with both validity and enforceability, and will almost certainly exclude important terms such as the identity of the contractual parties, exclusions / limitations of liability, waivers / releases, jurisdiction / choice of law, dispute resolution, confidentiality / non-disparagement, entire agreement provisions etc, the majority of which are designed to help the parties resolve their contractual disputes when they arise, and the absence of which creates even more problems and expense for the parties when disputes arise.

The use of software (DocuSign etc) to speed-up and simplify the process of executing (signing) contracts (especially with parties spread all over the world) and the implementation of statutory rules governing the valid execution of contracts (eg Electronic Transactions Ordinance (Cap. 553) in Hong Kong which recognises two different types of signatures which have the same legal effect as a physical (wet ink) signature – electronic signatures and certificate-based digital signatures) means that there should be no need for the (we say, reckless) use of text messages on social media platforms to try to create legally enforceable binding contractual relationships between parties – especially when there are millions of dollars at stake ! 😊

 

For more information and assistance, please contact Kevin at kevin.bowers@bowers.law if you have any questions about this Room 228 Newsletter.

This Newsletter is not intended to be and should not be relied on as legal advice. You should seek professional legal advice before taking any action in relation to the subject-matter of this Newsletter.

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