Acceptance of Contractual Terms in the Digital Era

Can a thumbs-up emoji (👍) be considered as acceptance of a contract? Yes, according to a recent ruling by a Canadian Court.

The King’s Bench for Saskatchewan (equivalent to a Supreme Court in Australia) effectively acknowledged that the use of a thumbs-up emoji (👍) constitutes acceptance of a contract in South West Terminal Ltd v Achter Land & Cattle.

Background

Achter Land & Cattle LTD (ALC) had sold various types of grains to South West Terminal (SWT) since 2015. It was standard practice for the parties to discuss the critical points via telephone. SWT would then draft each contract before texting a photo of their signed version to ALC. ALC accepted by replying with “looks good,” “yup,” or “ok.” The parties would fulfil their contractual obligations without issue.

In March 2021, after a lengthy telephone discussion, SWT texted ALC a photo of a contract to purchase 87 tonnes of flax. This was accompanied by a message – “Please confirm flax contract.” ALC replied with a thumbs-up emoji – “👍.”

When ALC failed to deliver the 87 tonnes of flax, SWT sued for breach of contract and damages.

The judgment

ALC defended the claim by arguing that it had not entered the contract – the thumbs-up emoji was merely a confirmation that they had received the contract – and no more than that. The Court disagreed.

Through Dictionary.com, the Court began its analysis by defining the “thumbs-up emoji”: “The thumbs-up emoji is used to express assent, approval, or encouragement in digital communications, especially in Western cultures.”

The Court then accepted SWT’s evidence that throughout the business relationship of the parties, the parties would:

1. Negotiate contracts via telephone conversations, where key terms were discussed
2. ALC would request SWT to draft up the contract
3. SWT would send the contract to ALC
4. ALC would confirm the contract by replying with “looks good,” “yup” or “ok”
5. The parties would fulfil their contractual obligations without issue.

The Court further stated that the deal involved a verbal agreement. ALC’s conduct was consistent with how they conducted their business relationship – although, this time it was done with a reply of a thumbs-up emoji.

The real question wasn’t what ALC thought the thumbs-up emoji meant but what a reasonable bystander knowing the background, would understand.

Justice T.J Keene stated:

“[T]his 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.”

Implications for Australia

Australia and Auckland have Common Law legal systems. It wouldn’t be surprising if Australian Courts reference this case and reach the same conclusion with the appropriate facts. It also won’t be the first time an Australian Court has interpreted the meaning of emojis.

In the District Court of NSW case, Burrows v Houda, the Court was faced with the question of whether the use of a “zipper face” emoji (🤐), a “face of clock” emoji (⏰), and a “collision”, “face with tears of joy” and “ghost” (💥 😂 👻) were capable of being defamatory. The Court, for the most part, referred to Emojipedia for interpretation and definition. Like the Canadian Court’s test of “an objective and reasonable bystander,” the District Court of NSW raised the question of what an “ordinary reasonable social media reader would infer…”

For most day-to-day transactions, parties to a contract must be alert to their contracting practices. It is also important to fully understand what an emoji means and how it can be interpreted. The safest option for parties is avoid using emojis at all.

For transactions executed under the Corporations Act, the provisions require the document to be signed. It will therefore be difficult to make any argument to justify an emoji as a valid replacement for the signatory requirement – unless the individual’s signature is an emoji.

For more information on what may constitute acceptance of contractual terms in the digital era, please contact Coleman Greig’s Commercial Advice team.