The Supreme Court of Queensland has recently been asked to consider whether or not an exchange of emails between a potential purchaser and the agent of a vendor was sufficient to create a legally binding contract. The first question answered by the Court was whether or not the facts of the case supported the finding that a contract existed, and second whether or not that contract could be created on the mere sending of emails. In this case, there was no formal contract for the sale of land.

Facts

Owners of the roadhouse in northern Queensland appointed an agent to sell the property on their behalf. The Plaintiff approached the agent to make enquiries regarding the property and expressed an interest to purchase it.

Late in October 2014 the vendor’s agent sent an email to the purchaser that listed out the terms upon which the vendor would sign a contract. A draft contract for the sale of land was also attached.

The email contained an offer that expressly noted that “this offer is of course subject to contract and due diligence …” but went on to say that “we…need acceptance of our offer immediately so we are in a position to instruct the appropriate consultants to carry out the necessary investigations”.

The agent responded by email stating that the offer was accepted but that they understood the contract to be “We accept the below offer which we understand will be subject to execution of the Contract provided … [with a] minimal due diligence period and the provision of all information/reports, etc. …”.

A couple of days later the Plaintiff’s solicitors sent a draft contract which actually changed some of the terms that had been included in the earlier offer. The vendor was not comfortable with those amendments. Coincidentally at the same time as notifying the purchaser that they were not happy with the amendments, the vendor notified the purchaser that they had entered into another contract for sale with another party.

The prospective purchaser sued and argued that the email exchange constituted a valid and binding agreement that the vendor was required to comply with.

Was there an agreement?

We have previously reported on the principles set out in the case of Masters and Cameron which assist courts in determining whether an agreement has been reached in circumstances similar to the above. In this case, the court determined that the parties had reached finality as to all the terms and the parties intended to be immediately bound. The purpose of finalising the arrangement in contractual form was simply to restate the agreement more completely but not to deviate from it. In that context the court found there was a binding contract for sale. The broader context (combined with express words in the emails) indicated to the court that the parties considered themselves to be bound immediately and exclusively by the terms they had agreed upon.

There was no signed documentation – only an exchange of emails. Is this sufficient?

The court had to consider whether or not an exchange of emails can create a binding contract. The court was assisted by the provisions of Electronic Transactions (Queensland) Act 2001 (Qld). That Act provides that if a person’s signature is required under any Queensland law, the requirement is taken to have been met for electronic communications if the electronic communication properly identifies the person sending the email and displays and confirms their intention to be bound by the contents of it. In this scenario the requirements of Section 14 were complied with and the exchange of emails was considered sufficient to bind the parties.

Lessons

The precise wording of emails is extremely important. The offer email by the agent and the acceptance thereof, were somewhat ambiguous in that on the one hand they were saying that they were subject to contract, but on the other hand, they required an express and binding confirmation that the agreement had been entered into. At law it should be made very clear as to the intentions of the parties– either there is or is not an agreement at that particular time. If the parties do not intend to be bound at that time, then it should be expressly stated as such. This is the case whether the correspondence is verbal, in written snail mail communications or communicated via email or other electronic medium.