A court in Canada recently ruled that a farmer’s “thumbs up” emoji response to a contract sent by a grain cooperative counts as acceptance of a contract, making the document a legally binding agreement.
The case was heard in the Canadian province of Saskatchewan, where a court sided with a grain buyer who sought to enforce a contract with a farmer during the COVID-19 pandemic when business was conducted remotely — in this case by text message.
The grain buyer sent a photo of a contract for about 87 metric tons of flax for the farmer to deliver, with the note: “Please confirm flax contract.” The farmer responded with a thumbs-up emoji.
But the grain never arrived. The buyer sued for breach of contract, and the farmer contended that the emoji did not constitute a signature, only that he had acknowledged its receipt.
What seemed like a simple miscommunication became a complex and nuanced legal dispute.
While the jurisdiction is limited to Saskatchewan, the decision sets a legal precedent in Canada, one that other Canadian courts have to confront moving forward. “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,” the court said.
Though Canadian law sets no legal precedents in New York or the U.S., the case highlights the legal challenges newer methods of communication and technology may present businesses with.
Components of a Binding Contract
In order for a contract to be binding in New York, it must contain all four of the following components.
- An Offer: A seller offers to sell certain goods or services at a specific price.
- Acceptance: The customer agrees to buy the product or services at the offered price or counters at another price (which would then need to be agreed upon by the seller).
- Consideration: Contracts must contain a promise to do something. In debt collection cases, the buyer typically agrees to pay a certain amount in return for goods or services.
- Performance: The seller provides the services and agrees to complete the transaction and deliver.
When all of these components are met, a contract is considered binding. But what constitutes acceptance of a contract? Does acceptance always have to be in writing or a signature on a paper or digital contract?
What Constitutes Agreeing to a Contract?
Although it’s ideal to have a signed contract, you can still get paid for goods and services without a formal agreement.
It can be difficult to prove the elements of a valid agreement without documentation. However, if a business rendered a service and the customer received a benefit, the court recognizes there should be payment for that service. In cases like this, the court creates a contract of sorts called a “quasi-contract.”
The Statute of Frauds in New York requires that certain contracts be made in some form of writing in order to be valid, such as those for goods in excess of $500.00. However, should the parties not have a written agreement in such a transaction, then the seller can proceed in court against a non-paying buyer in quasi-contract.
Non-formal contracts can also be “implied in fact.” Contracts implied in fact are not written documents but agreements based on the language, actions, and behavior of both parties, which shows intent to enter into a contract.
Knowing that you don’t need a formal agreement for the courts to deem matters a breach of contract, could an emoji constitute an agreement in a U.S. court case? Possibly.
To help protect your business and improve your odds of favorable debt collection, it’s important to have a written contract whenever possible.
If you have a debt collection matter you need assistance with, contact Frank, Frank, Goldstein and Nager for a consultation.
