The 'thumbs up' emoji - a playful image or a binding signature?

The ‘thumbs up’ emoji – a playful image or a binding signature? Implications of the decision in South West Terminal Ltd v Achter Land and Cattle

INTRODUCTION:

A recent Canadian summary judgment in South West Terminal Ltd v Achter Land and Cattle Ltd [2023 SKKB 116] (‘South West Terminal’) has created waves within the legal profession as courts attempt to keep pace with the repercussions of the new technological world. Canadian courts have attempted to interpret the meaning of the humble ‘thumbs up’ emoji and found that its use can constitute agreement to the terms of a contract. With its decision, the Canadian court has published a cautionary tale to both corporations and individuals around the use of multimedia technologies and digital communications in contract negotiations.

BACKGROUND:

The parties to the proceedings were a “grain buyer” (South West Terminal (‘SWT’)) and a farming corporation (Achter Land & Cattle Ltd (‘ALC’)). In the face of the COVID-19 pandemic, contract negotiations for the sale and purchase of grain took place via text message between the companies; Kent Mickleborough (Mr Mickleborough) for SWT and Chris Achter (Mr Achter) for ALC.

The case related to the sale and purchase of 87 metric tonnes of flax by SWT from ALC. The terms of the sale were outlined in a “Draft Delivery Production Contract” (‘the Contract’) which was sent by text message from Mr Mickleborough to Mr Achter. The key terms included the price per bushel and delivery time for the flax, being some stage in November 2021. Mr Mickleborough sent a text message to Mr Achter with a photo of the ‘wet-signed’ contract, together with a further message stating, “Please confirm the contract”. In response, Mr Achter sent a “thumbs up” emoji.

ALC failed to make the flax delivery to SWT in November and SWT sued for breach. ALC defended the claim, stating that a “thumbs up” emoji could not constitute effective acceptance, and that even if it did, the contract may be void on the basis that its terms were uncertain.  The defendant’s uncertainty argument hinged upon Mr Mickleborough’s text messages not containing “General Terms and Conditions” in addition to the price, quantity and delivery date of the flax.

ISSUES:

It is a long-established principle of contract formation that a binding agreement is only valid when an offer by a party, supported by consideration, is accepted by another party with the intention of entering into a legal relationship. While it is best practice that this intention be evidenced by a signature on a document which sets out all of the agreed terms, binding contracts can (at least in Australia) also take other forms including an exchange of emails or even just a discussion.

A central aspect of the case that the Canadian court was required to address was whether the “thumbs up” emoji could be objectively interpreted to constitute acceptance of the contractual terms. That question involved an examination of the history of  business dealings in which Mr Achter had accepted contracts (and subsequently performed under those contracts) by sending text messages such as “Ok”, “Yup” and “Looks good”.

His Honour Keene J remarked that:

“what we have [in this case] is an uncontested pattern of entering into what both parties knew and accepted to be valid and binding deferred delivery purchase.”

The Court found that, in light of the previous negotiations between the parties, the ‘thumbs up’ emoji had sufficient affirmative qualities to demonstrate an intention to enter into the contract.

“a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad idem – a meeting of the minds- just like they had done in numerous occasions.”

Keene J also addressed the question of uncertainty of the contract’s terms and found that, to a reasonable person, the previous business dealings between the parties showed that Mr Achter was aware of the essential contract terms. In support of his judgment, Keene J cited Justice Rothstein’s understanding of contract law in Sattva Capital Corp v Creston Moly Corp. 2014 SCC 53 which expressed that:

“courts must read contracts in the context of the surrounding circumstances known to the parties at the time of the formation of the contract.”

To this extent, any argument that the Contract was void for uncertainty was not accepted.

A SLIPPERY SLOPE? WHAT ARE THE POTENTIAL IMPACTS ON AUSTRALIAN LAW?

While the decision of Keene J is not binding on common law jurisdictions in the Asia Pacific, it is of relevance to common law jurisdictions. The judgment records that both SWT and Achter’s counsel sought to locate similar decisions in foreign jurisdictions and were unable to find anything matching the novel facts which arose before the Canadian court. 

His Honour dealt with the concern that the questions before him (and ultimately his judgment) may ‘open the floodgates’ for cases asking the courts to interpret various emojis.  His Honour accepted that there may be a public policy argument surrounding his finding that the ‘thumbs up’ emoji can constitute a legally binding signature. However, his Honour went on to state:

“I agree that this case is novel… but nevertheless this 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”.  

The importance of this decision is highlighted by Adobe’s ‘Global Emoji Trend Report’ which states that “over half of Australians have actively increased their emoji use over the past 12 months, with nearly all users sending up to 50 emojis in their text or online messaging a day”.

However, this and other frequently used media tools such as common text abbreviations, graphics interchange format (GIF) images and other methods of communicating reactions will present a significant challenge for the Courts in establishing certainty or intention within contract negotiations. Of particular concern is the subjective interpretation of media and multimedia material used in contractual negotiations. The issue also encompasses cultural considerations, for example in regions like, Greece, Iran and Afghanistan where a ‘thumbs up’ may be interpreted as a sign of disrespect.

These and other developing forms of communication will no doubt shortly need to be grappled with by Australian courts as the international legal system adapts to the “new reality” of how people communicate. Obviously there is a significant element of subjectivity to the interpretation of digital communication methods and this will no doubt prove to be a challenge in the very near future.

CONCLUSION:

The presence of emojis and other forms of digital-culture communications are likely to only become more prolific as we move through the 21^st Century. The South West Terminal judgment identifies that emojis should not be treated as a throwaway image and rather, when compounded by affirming context, have the potential to create binding legal arrangements. A keen eye should be trained on cases which may consider the outcome and application of the South West Terminal hearing and, until the courts carve a clear path forward, the use of emojis is likely best saved for the caption on your newest social media post.

The above information is general in nature and should not be relied upon as legal advice. While it is a Canadian decision, we have considered it and its implications from an Australian perspective. It is current as at 18 August 2023 but is subject to change.

Contributors

• Joshua Barry – Associate, Ben Watson - Associates, Deutsch Miller – Litigation Team
• Denise Angelopoulos, Lily Kitteringham - Paralegals, Deutsch Miller – Litigation Team

About Deutsch Miller:

As Alliott Global Alliances’s law firm member representative in New South Wales, Australia, the team at Deutsch Miller combines technical excellence, first class service and a practical, commercial approach to legal issues, earning them a reputation as the astute choice for international and domestic clients and their advisers when they face complex, critical commercial challenges and opportunities. Read more.