Useful Resources

Emails can form contracts

Be warned! Your Emails can form a valid binding Contract.

Electronic communications between Parties and contractual implications is a real risk, both if it was unintended and if you intended to record the details of your deal only in email.

Although the Courts are often perceived as being backwards regarding technology, they have in fact responded to this shift in communication by accepting email as a means of creating binding agreements.

Not all business managers have caught up with this fact and are regularly placing their company at risk.

The speed and casual ease in which emails can be exchanged is their attraction. Matters can progress much more quickly and the issues drilled down on faster using this method. The down side is the danger emails represent when they are used for contractual negotiations, and why parties frequently find themselves in binding contracts unintentionally.

If you have started to negotiate by email but don’t want your emails to form a binding contract, then you should clearly state in your emails that “no binding contract is formed unless and until a formal contract has been executed”.

But will that still protect you?

The answer is no. Not necessarily. But it’s a good start. If you don’t expressly state words to that effect, a Court is unlikely to imply in your emails, that you intented to be legally bound.

In the case of Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119 a binding contract for the sale of land was held as made by email.

Incredibly, both the offer email and the email accepting the offer referred to the offer being “subject to contract” and “subject to execution“. Yet this held was not enough to make the offer conditional.

The Court found that the broader context of the emails revealed that the parties had intended to be bound immediately. The Court was also satisfied that the emails met the requirement for a contract for the sale of land under the Electronic Transactions (Queensland) Act 2001(Qld).

There is another important take-home from this case, and that is that you should be aware that a document which is labelled as something may not necessarily be found to be that document. For example what do you may think is merely a memorandum of understanding, can also be a binding contract and held against you.

What to do?

If you think you may have unintentionally entered a binding contract, or someone is denying that you entered a binding contract call me now!

Time is of the essence, and the longer likely you were going to be held to have been out to the contract or have excepted contact which gets the other party out of the contract.

You may be facing dire consequences if you ignore the risk. Call me today to discuss.