Will UK businesses soon be able to sign contracts with emojis?
In this guest article, Masuma Ahmed and Patrick McCallum from Wright Hassall discuss why UK business owners need to be aware of this case, especially when dealing with Canadian suppliers and customers.
Earlier this year, a Canadian Court accepted the “thumbs-up” emoji as a legally binding signature in a contract for the sale of goods. The first–of-it’s kind case highlights how business owners need to tread carefully when engaging in commercial discussions over SMS, WhatsApp and other apps.
What happened in the South West Terminal Ltd. v Achter Land & Cattle ‘thumbs up’ case?
In the case of the emoji ruling, South West Terminal and Achter Land & Cattle were negotiating the purchase of 86 tonnes of flax through their respective representatives, Kent Mickleborough and Chris Achter.
Mickleborough sent a text message to Achter with a picture of a contract for delivery of the flax and asked him to “please confirm flax contract”.
Achter responded with a thumbs-up emoji. Achter failed to deliver the flax at the agreed delivery date, by which time the price of the flax had increased, and South West Terminal had to procure flax from an alternative source at additional cost. South West Terminal sued Achter Land & Cattle for breach of contract.
The Court held that the use of the thumbs-up emoji was a valid digital signature, as, despite this being a non-traditional way to sign a document, the emoji performed the purposes of a valid signature, and the parties’ conduct was as it had been on previous contracts without any issues.
In reaching its decision, the Court emphasised its awareness of the increased use of digital communication in commercial contexts and stated that it could not dismiss the “tide of technology and common usage” of emojis.
How does this decision affect UK businesses?
Despite this decision arising in the Canadian courts and therefore not affecting English law, as a UK business, you will still need to bear this decision in mind during your commercial negotiations.
Firstly, if your business deals with Canadian suppliers and/or customers, you must be particularly mindful of how you communicate with such parties.
If it’s common practice for both parties to communicate via online or mobile messaging (e.g. WhatsApp) during contract negotiations or during the operation of a contract that has already been entered into, then you need to be wary that using emojis in such negotiations could inadvertently result in you agreeing to changes to specific terms of a contract or agreeing to a contract in its entirety.
When negotiations get to the stage where a contract is nearly ready to be signed, you and the other party need to agree on how this is to be done (e.g. wet ink signature, exchange of scanned copies via email (etc.)) to avoid the risk of a contract being unintentionally accepted by way of the use of emojis.
If a Canadian supplier and/or customer shares a copy of a proposed contract with a UK business, you need to be very careful in how you acknowledge receipt without indicating your acceptance of the contract itself.
What does this decision mean for UK businesses in the future?
Whilst this decision has no direct impact on English law for the moment, it’s important to note that there is nothing to prevent an English Court from reaching a similar decision in the future, particularly given the continued use of messaging services to conduct contract negotiations.
In the meantime, if you’re a UK business that communicates deals with any Canadian suppliers and/or customers, you will need to consider whether changes need to be made to how you communicate with them to reduce the risk of emojis committing you to unintended contractual liabilities or obligations.
At a more general level, to avoid any danger, you could also consider the following:
- Deliver training to staff on the risks involved in using emojis when communicating with third parties
- Establish rules and guidelines on how staff should communicate with suppliers and customers using email, SMS and WhatsApp (etc.). This could include seeking to agree:
- To the exclusion of specific methods of communication during commercial discussions
- How any contract is to be signed at the outset of negotiations
- How particular emojis are to be interpreted during negotiations
- Limit who within the business has a work mobile phone
- Limit who within the business has the authority to negotiate and conclude contracts on behalf of the business
In summary, it’s important to be alert to the issues raised from the South West Terminal Ltd. v Achter Land case, not just in case you do business in Canada, but because this decision demonstrates a significant development in the way in which the Courts are prepared to interpret and give legal meaning to seemingly innocuous and informal inter-party communications.
In the years to come, it is likely (perhaps even inevitable) that courts will reach similar decisions in other jurisdictions, perhaps even England & Wales.
For now, consider the ways in which you conduct commercial discussions and train your staff on the potential significant legal consequences of their use of emojis and, who knows, to be on the safe side, maybe even memes and gifs.