Australia: A reminder of the dangers of negotiating by email

Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd [2015] QSC 119 (Stellard's Case) demonstrates the risks of being bound by email communication in business affairs even with the words "subject to contract".


The purchasers entered into negotiations to buy the vendor's service station business and the associated freehold.

On 30 October 2014, the defendant's representative emailed the purchasers' representative a draft contract for sale, and expressed the view that the vendor was willing to sell on certain terms including:

  • Price;
  • Deposit amount;
  • Purchase of stock at cost;
  • · Condition of sale being fuel tank and line testing, and environmental investigations;
  • Settlement date; and
  • Place of settlement.

On 31 October 2014, the representatives had various telephone conversations and agreed:

  • to use one contract for both the freehold and the business; and
  • the contract would be on the basis of the email sent by the vendor's representative on 30 October 2014, but with due diligence including environmental investigations.

The vendor's representative asked that this offer be put in writing.

Later that day, the purchasers' representative emailed the vendor's representative and stated:

  • he was making the offer for the freehold and business at the agreed price and identified the purchasers;
  • the offer was subject to contract and due diligence as discussed;
  • effecting an exchange of contracts should occur the next week, but he needed acceptance of the offer immediately.

The vendor's representative responded by email 45 minutes later and confirmed the offer was accepted, but subject to execution of the contract (with agreed amendments) in the following week.

On 3 November 2014, the purchasers' solicitor emailed an amended contract to the vendor's representative. The updated contract:

  • identified the purchasers;
  • removed a special condition concerning a purchaser's guarantee; and
  • inserted two conditions relating to due diligence and environmental conditions.

On 7 November 2014, the vendor's representative responded that:

  • the contract was not accepted due to changes in the contract that were not agreed between the parties; and
  • the sellers entered into another contract with a third party to sell the freehold and business.

The purchasers argued the email exchanges of 31 October 2014, in the context of the conversations between the representatives and the email from the vendor's representative of 30 October 2014, constituted a valid and binding agreement.

The defendant argued no contract was formed as:

  • the offer was expressed to be subject to contract;
  • the acceptance was not an unqualified acceptance;
  • the parties did not agree on material terms of the transaction; and
  • the parties did not intend to be legally bound – with intent not inferred until they progressed to execution and exchange


In the leading case concerning the formation of a contract, Masters v Cameron (1954) 91 CLR 353, the court expressed that where parties reach agreement on contractual terms and agree it is subject to formal contract, three possible situations may arise:

  • parties agree on all terms and intend to be bound, but wish to have those terms restated in a more complete form but not different in effect;
  • parties agree on all terms, but performance is conditional on execution of a formal contract;
  • parties do not intend to conclude their negotiations unless a formal contract is entered into;

Whether or not a legally binding contract is entered is determined objectively (i.e. on the communications not the respective intentions).

Application to this case

The court held that, in the context of the emails and conversations between the representatives of the parties, they were bound immediately by the terms they had agreed. The parties, in expressing their offer and acceptance to be subject to contract, were merely expecting to make a further contract containing, by consent, additional terms.

On the vendor's argument that there was no contract as the parties did not agree on the purchaser guarantee provision or the due diligence period, the court found:

  • the guarantees were not a matter essential to the entry into the contract and therefore absence of agreement did not affect the existence of the contract; and
  • the due diligence period of 40 days in the email from the vendor's representative on 30 October 2014 was the agreed period.

On the vendor's argument that there was no contract as the requirements of section 59 of the Property Law Act 1974 (QLD) were not satisfied (namely that the contract was not signed validly), the court found that emailed acceptance by the vendor's representatives satisfied section 14 of the Electronic Transactions (Queensland) Act 2001 which provides for circumstances in which electronic communications are taken to have been signed.

What do we learn from this case

Stellard's Case is a reminder of the dangers of negotiating by email, and the need to be clear in expressing what you have agreed to.

It may be necessary for lawyers regularly negotiating interests in land (including leases) to include a statement such as the following:

Please note that there is no intention to create a binding legal relationship between the parties until formal exchange of contracts. In particular, despite anything contained in email correspondence between the parties and their lawyers, the general conveyancing practice of no binding contract until formal exchange between lawyers of signed contracts applies.

An alternative may be for negotiating lawyers to express upfront and in unambiguous terms that the parties will not be bound in any way until a formal contract is agreed, signed and exchanged between the respective lawyers.

If the facts of this case occurred in NSW, it is uncertain whether the same outcome would have been reached as conveyancing practice in NSW is different to that in Queensland. NSW courts have consistently given effect to NSW conveyancing practice, including in relation to formal exchange of contracts.

Other recent applications of the same principles

In Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASC 21, the court found that a binding agreement for lease was formed when the parties, already in a landlord and tenant relationship, agreed on the terms of a lease renewal by email. This was despite subsequent negotiations, dealings and communications after the agreement by email was reached.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.