The High Court in England has held that a contract had been formed and was in force, even though neither party had signed it. The crucial factor was that one party had indicated by email that he was willing to accept the draft as it stood and this was deemed to be sufficient acceptance of the contract's terms.
In this case, one party, Mr Bragg, was seeking to buy the shareholding of his co-director, Mr Grant, in their company. Mr Bragg's lawyer issued a draft share sale agreement to Mr Grant who, in turn, amended the draft and returned it. The amendments were not acceptable to Mr Bragg and the parties reached an impasse.
A few days later, Mr Bragg's lawyer emailed Mr Grant again, offering to proceed on the basis of the wording in the original draft agreement. Mr Grant responded by email confirming that he was prepared to enter into that agreement in its original form. The Court held that the terms of the sale and purchase of the shares (as set out in the draft agreement) were agreed and the contract concluded.
The Court considered that, whilst it may have been the parties' original intention that they would only be bound on execution of the agreement, that intention changed during the course of the email correspondence due to the circumstances. The second email to Mr Grant was intended to resolve the impasse and, on its terms, did not require Mr Grant to actually sign the agreement. Rather, he only had to accept the wording of that agreement (which he subsequently did by email). To hold otherwise would, in the Court's view, have defied commercial reality and the objective intention of the parties.
This case offers further confirmation that contracts can be concluded by email. It also emphasises that great care should be taken when negotiating the terms of a contract by email as an indication of acceptance could well bind you to its terms.
Postscript
Mr Bragg has asked us to point out that he appealed the decision referred to above to the Court of Appeal and in a judgment of 20 October 2009, [2009] EWCA Civ 1228, the Court of Appeal unanimously allowed the Appeal. We are happy to clarify the position. The Court of Appeal found that there was in fact no agreement by Mr Bragg to sell his shareholding in Premier Resorts Limited. July 2009.
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