Modern contract law for acceptance: Thumbs-up emoji considered valid acceptance of contractual terms

In Brief: A Canadian Superior Court has ruled that the use of a thumbs-up emoji " 👍 " was effective to constitute an acceptance of contractual terms. The King's Bench for Saskatchewan stated this use of modern technology "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". 

In a recent ruling, the King's Bench for Saskatchewan in Canada (equivalent to a state Supreme Court in Australia) acknowledged that the use of a thumbs-up emoji (👍) can constitute acceptance of contractual terms. For the most part the case involved core facts that were not in dispute, with the decision being the application of contract law and the Saskatchewan Sale of Goods Act RSS 1978 in the context of modern day communications. What set the case apart was that the Court found that a thumbs up emoji (👍) could be used to confirm a contract whilst also meeting the requirements of the Sale of Goods Act that required "….some note or memorandum in writing of the contract [being] made and signed…".

The Judgment

The case of South West Terminal Ltd v Achter Land & Cattle [2023] SKKB 116 concerned an action for breach of contract where South West Terminal (SWT) purchased flax from Achter Land & Cattle (Achter), with delivery expected by the end of November 2021. However, the flax was never delivered, and the supplier Achter argued that the use of a thumbs-up emoji (👍) could not convey an acceptance of contractual terms, and therefore there was no legally binding agreement for the supply.

The Court was tasked with considering whether there was "consensus ad idem" ("a meeting of the minds") or an intention to create legal relations between the parties resulting in a validly formed contract.

The Court held that the emoji was effective to convey acceptance of the contractual terms and that a valid contract had been formed. Achter was ordered to pay damages in the sum of $82,000 (CAD) for failing to deliver the flax (this amount being the difference in pricing between the contract in dispute and the cost of the replacement supply).

Background 

Previously, Achter had sold various types of grains to SWT under deferred delivery purchase contracts in a long standing relationship going back over 5 years. It was standard practice between the parties for SWT's representative to draft each contract then text a photo of the signed version to Achter's representative to accept via text. The Achter representative would often accept such contracts with "looks good", "ok" or "yup". All previous contractual obligations had been fulfilled by Achter without issue. 

In March 2021, SWT's representative texted Achter a photo of the contract for the purchase of the 87 tonnes of flax with a message attached: "please confirm flax contract". Achter replied with a thumbs-up emoji (👍), however, ultimately, never delivered the flax.

SWT argued that the emoji demonstrated Achter's acceptance of the contractual terms and that the contract was enforceable. However, Achter denied that the (👍) emoji constituted acceptance and claimed that it merely confirmed that the contract was received, and no more. The Court disagreed.

When identifying the question in issue, the court stated that the question was not what Achter "may or may not think a 👍 emoji means. It is what the informed objective bystander would understand."

The Court's analysis commenced with the definition of the emoji by dictionary.com: "a thumbs-up emoji is used to express assent, approval, or encouragement in digital communications", indicating that the emoji could imply some form of positive agreement when used. 

The Court concluded that the use of the thumbs-up emoji (👍) was analogous to the previously sent short-form texts confirming agreement ("looks good", "ok" and "yup") and was the customary method by which the parties conducted their commercial relationship. 

The Court was satisfied that the Achter representative had accepted the contract "just like he had done before except this time he used a 👍 emoji", and that the contract was validly formed due to the existence of consensus ad idem.

Contract in writing and executed

Of relevant interest in the case, albeit reliant on local statute, was whether the (👍) complied with the local Sale of Goods Act requiring "….some note or memorandum in writing of the contract is made and signed…" and local Electronic Information and Documents Act where acceptance of an offer leading to contact requires "an action in an electronic form".

The Court found that:

• as the requirement of a “note or memorandum” in the Sale of Goods Act arose from the Statute of Frauds of 1677 which does not require all terms of the contract being exchanged, just the essential terms, the note or memorandum requirement was met by SWT when it texted the first page of the contract to the supplier Achter;
• in the circumstances a (👍) emoji was “an action in electronic form” that includes "touching or clicking on an appropriately designated icon or place on a computer screen or otherwise communicating electronically in a manner that is intended to express the offer used to allow to express acceptance" as permitted under local law;
• the contract could have alternatively been executed in hard copy does not detract from the fact that there are a number of options to execute a contract, nor should it lead to the conclusion that using an electronic option is invalid.

The supplier, Achter argued that an actual signature was essential because it confirms the person’s identity and that it conveys a message of acceptance. The Court did not deny this was the case but found that of itself does not prevent the use of an emoji such as a (👍). Authenticity of the text messages and identity of users were not in issue in the case as it was agreed that the cell phones used during communications were unique to the key individuals representing each of the parties.

Further, Achter ran a public policy argument that allowing a (👍) emoji to signify identity and 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 (e.g. what does a (👊) emoji or a (🤝) emoji mean?) which would lead to the Court being inundated with disputes. Whilst the Court acknowledged that this case was novel (at least in Saskatchewan), the Court decided it could not (nor should it) attempt to stem the tide of technology and common usage by denying the meaning of the emoji in communications.

Modern Technology and contracts 

The case is a valuable reminder that the common law of contract has a tradition of evolving to meet the commerce of the day. Common law courts have always applied a wide range of analysis to determine contractual issues such as whether a certain type of signature is sufficient or whether parties agreed to be bound. Over time, courts have considered several deviations from “wet ink” signatures, including simple modifications such as crosses, initials, pseudonyms, printed names and rubber stamps, to then considering scanned signatures and electronic or artificially generated signatures. Further, Courts have recognised different forms of documents used to bind parties, from deeds and vellum to contract paper to emails "in writing". Agreements by seal, signing, handshake or orally made, acceptance by email, click through online terms, clicking on the “I agree" icon, or pressing a computer screen at an appropriately designed icon as constituting consent, agreement or an electronic signature. 

This case is an example of the Court relying on traditional principles (e.g. Were the parties "ad idem"? What would the informed objective bystander understand as agreement?) when considering contractual issues presented by the advancement of technology however also the Court not shying away from the practical uses and commercial implications of such. As noted by the Court in this case "this Court cannot (nor should it) attempt to stem the tide of technology and common usage – 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".

Of note in this case, the Court's acceptance of the emoji hinged upon the prior communications and contractual practices of the parties; illustrating the continual evolution and re-evaluation that Courts engage in when considering what constitutes contractual acceptance. 

Whilst it is certainly not recommended (or usual) to enter contracts by sending the other party an emoji, this case is an interesting development for parties engaging in commerce via short-form text or online conversations to be aware of. It appears that the Courts are ready for the new reality of communications - parties who regularly enter into contracts should be as well.

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