Construction / 3 min read
Consider this scenario: GC calls Subcontractor and requests pricing for change order work. In response, Subcontractor prepares a proposed change order document including the requested pricing and sends a PDF of the proposed change order via text message to GC. The lone reply from GC. Is there a binding agreement between GC and Subcontractor on the terms included in the proposed change order?
Perhaps your initial inclination is to dismiss the question as a bit silly and answer "of course not." But the essence of this scenario is precisely what a court in Canada was presented with in South West Terminal Ltd. v. Achter Land & Cattle Ltd. [2023] SKKB 116.
In Achter, South West Terminal Ltd. (the "Buyer") contended the parties entered into an agreement where Buyer agreed to buy and Achter Land & Cattle Ltd. (the "Seller") agreed to deliver a specified volume of flax at a specified unit price with delivery to occur on a certain date. The Seller failed to deliver the flax within the specified time period and the Buyer sued.
Subsequent to telephone calls between the parties' representatives, the Buyer prepared a contract document which included the details of the transaction (volume, unit price, delivery date). The Buyer's representative added an ink signature to the contract document, took a photo of the document, and sent that photo to the Seller's representative via text message along with a note asking the Seller to "please confirm flax contract." In response, the Seller's representative replied with a simple thumbs-up emoji.
The Achter court focused on principles of contract formation; specifically, the basic concept that a contract may only be formed when there is an offer presented by Party A and that offer is accepted by Party B with the intention of creating an agreement. In that regard, the court's analysis hinged on its interpretation of the meaning of the thumbs-up emoji sent by the Buyer's representative. The Buyer argued that the emoji communicated the Seller's acceptance of the contract's terms. The Seller, on the other hand, argued that the emoji only communicated an acknowledgment of the Buyer's text message and that the Seller had received the contract.
Among other things, the Achter court appeared persuaded by the parties' prior business dealings and the emoji's dictionary meaning. Indeed, the parties had previously communicated by text message with the Seller using responses such as "ok" and "looks good" and "yup" to communicate contract acceptance. And, according to Dictionary.com, the thumbs-up emoji "is used to express assent, approval or encouragement in digital communications, especially in western cultures." Ultimately, the court determined that the thumbs-up emoji sent by the Seller communicated the Seller's approval of the contract and that the parties had reached a meeting of the minds on the terms of the contract.
The Achter court ruled in favor of the Buyer – the Seller's lone thumbs-up emoji was enough to create a contract between the parties. The Seller was ordered to pay the Buyer more than $82,000 in damages for breaching that contract.
Using this case as an example, would there be a binding agreement between GC and Subcontractor on the terms included in a proposed change order sent via text by the Subcontractor? Perhaps there is, but maybe not – as lawyers often say, "it depends and the details matter." However, it would be foolish to dismiss the question as silly and, in the event of a history of communications between the parties similar to those which existed in the Achter case, then there is a decent chance that the thumbs-up emoji sent by the GC is enough to constitute approval of the proposed change order and create a binding agreement.
In recent years, the use of informal or less-than-formal communication platforms (text messaging, WhatsApp, etc.) appear to have become accepted means of business communication. In certain industries, including the construction industry, the use of those platforms is nearing ubiquity. Because those platforms make it relatively easy to communicate by short-hand, emoji, acronyms, and other colloquial means, we suggest you proceed thoughtfully and with caution when conducting business via these platforms.
It strikes us as a generally bad idea to negotiate contract terms via informal communication platforms. We do not recommend it. If you absolutely must text about contract terms, we strongly recommend that you make it clear that the contract will need to be memorialized in some other writing. And, please, avoid using emojis to try to capture any meaningful terms of an agreement. If you do, you may be in a position one day where a judge or an arbitrator will be called on to decide how your chosen emoji will impact the bottom line of your business.