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.
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
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.
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
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.
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