Commentators and the media have gone crazy about the decision of the King’s Bench for Saskatchewan Canada granting summary judgment to a party and holding that a response text with an thumbs up emoji was acceptance of a contract to deliver 87 metric tonnes of flax. The case is South West Terminal Ltd. V. Archter Land & Cattle Ltd., 2023 SKKB 116 (CanLII June 8, 2023). The key issue was whether a contract was formed.
The Court stated that it had to look at “how each party’s conduct would appear to a reasonable person in the position of the other party.” The test for an agreement to a contract for legal purposes 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 a contract. The test is not what the parties subjectively thought but whether their conduct was such that a reasonable person would conclude that they had intended to be bound.
The Court also stated that when considering this question that they are not restricted to the four corners of the purported agreement, but may also consider the surrounding circumstances including the nature and relationship of the parties and the interests at stake to determine the question of an intention to create a legal contractual relationship. When looking at the parties relationship, the Court noted that he parties had a long standing business relationship that involved previous text communications where contracts for wheat had been made and done via text with simple short responses stating “looks good,” “ok,” or “yup.”
Noting the uncontested pattern of entering into binding delivery contracts in the past, the Court noted that each time in the past when the buyer asked to “Please confirm terms of durum contract,” the seller simply texted “looks good,” “ok,” or “yup.” The court held that the parties here, clearly understood the emoji to be a confirmation of the contract and not a mere acknowledgement of the receipt of the contract. The court also looked to the definition of a thumbs up emoji in Dictionary.com which stated that the thumbs up emoji “is used to express assent, approval or encouragement in digital communications, especially in western cultures.” Finally, the court granted the summary judgment and found damages for the buyer in the amount of the contract.
I must state off the bat that I love this case and agree with the result. While it was decided under Canadian Law, the decision reflects the modern technology reality that most people do deals on email or via text. Once again, this opinion is a cautionary tale for electronic communications and the danger of being careful before you hit the send button. My real concern is that laws in each jurisdiction are failing to keep up with technology and will continue to lag behind. Forward looking legislation should be developed and passed that is broad enough to cover the rapid advance of technology while still be specific enough to avoid challenges for vagueness. This is especially true in my state of Texas where the legislative body only meets every two years.
The opinions in this blog are solely the author’s and any comments, replies, or suggestions can be sent to john@jrjoneslaw.com.
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