Quick hit:

A Canadian Court has found that a 👍 (thumbs up) emoji sent by text message constituted acceptance of contractual terms and formed a binding contract. Whilst the use of an emoji to confirm acceptance of contract terms may be novel, the outcome in that case is not surprising. The conduct of the parties, including their prior dealings and similar informal communications, was a key consideration in the case – in our view, an Australian court would likely have reached the same decision.

What happened?

This case, heard in the Canadian province of Saskatchewan, involved an agreement for the sale of a large amount of flax grain. According to the buyer, it entered a binding contract with the seller in March 2021 to purchase the flax at a specified price on a deferred delivery date (later that year). The seller failed to deliver the flax grain at the specified date, by which point the price of flax had increased significantly causing the buyer financial damage because it had to pay more.

The buyer claimed that the contract terms were agreed by text message. The buyer had sent the front page of a signed contract to the seller, and the seller had responded with a 👍 emoji. The seller claimed that the 👍 emoji was not meant to indicate acceptance of the contract, but rather acknowledgement of receipt of it via text.

The court decided that the 👍 emoji message constituted the seller’s agreement to be bound by the flax contract, and awarded the buyer damages for the seller’s breach of contract.

Key to the decision was the prior business dealings between the parties. Particularly relevant were four previous deals the parties had agreed via text message between 2020 to 2021. In each scenario, the buyer similarly drew up a contract, signed it and sent a photograph to the seller via text asking them to confirm it. The seller responded each time using words to the effect: “looks good”, “Ok”, and “yup”, and the deals were done successfully.

The court found that due to this pattern of previous dealings, it was reasonable for the buyer to conclude that a similarly brief response, using the 👍 emoji instead of words, signalled the seller’s acceptance of the terms and intention to perform the contract. The judge concluded that the parties had reached “consensus ad item – a meeting of the minds – just like they had done on numerous other occasions.”

Australian perspective

Basic contract formation requires an offer by one party, acceptance by the other and the provision of consideration (essentially, an exchange of value between the parties). There’s no requirement that a contract be in writing – a contract can be made orally or may be implied from the conduct of the parties. (In the Canadian case, there was a requirement for a written and signed record of the sale agreement – the court found that the 👍emoji sent by text message fulfilled both the written requirement and had the effect of a signature.)

When assessing whether there has been an offer and acceptance, courts in Australia will look at whether there was an intention between the parties to create legal relations and make a binding contract. This is determined objectively – by what a reasonable person with knowledge of the circumstances would have understood the parties had intended to convey to each other. The previous course of dealings between the parties would be admissible evidence to assist with determining the objective intentions of the parties.

Whether the same conclusion would have been reached had this been the first transaction between the parties is unclear. In isolation, a request to “please confirm contract” and a simple 👍 emoji response (with no follow up message), may not have been sufficient to establish that the parties objectively intended to be bound.

Conclusion

As parties increasingly use new technologies to communicate, formalities in some business deals may diminish. Whilst the use of emojis or other informal communication methods may be understood by the parties to convey the intended meaning, it comes with the risk of uncertainty and misunderstanding. For valuable or important contracts, it’s preferable to avoid informal communications and to seek clarification if there’s uncertainty.

For advice about contracts, contact Jules Munro or Ruthanna Klawansky. For more information about dispute resolution, contact Adam SimpsonClare Young or Seb Tonkin.

By Ruthanna Klawansky