Can a contract be formed by an exchange of emails?

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Article2021 | 02 | 24

Can a contract be formed by an exchange of emails?

In Manitoba, electronic transactions are covered by The Electronic Commerce and Information Act C.C.S.M. c. E55 (the “Act”). Within the Act, section 19 provides:

Formation and operation of contracts

19(1)Unless the parties agree otherwise, an offer, the acceptance of an offer, or any other matter that is material to the formation or operation of a contract may be expressed

(a) by means of an electronic document; or

(b) by an act — such as touching a computer screen, clicking on a computer screen or speaking — that is intended to electronically communicate the offer, acceptance or other matter.

Legal effect of contract in electronic form

19(2) A contract shall not be denied legal effect or enforceability merely because an electronic document was used in its formation.

There is no case law specific to Manitoba where this legislation has been considered, so we must turn to cases from other jurisdictions where emails have been found to create a valid agreement.

In British Columbia, in the case of Vancouver Canucks Limited Partnership v. Canon Canada Inc.[1], the court found that the negotiation of an agreement by an exchange of emails resulted in a legally binding agreement even though no formal contract was signed.

In Saskatchewan, in the case of I.D.H. Diamonds NV v. Embee Diamond Technologies Inc.[2], the court found that the email chain between the parties satisfied four requirements for “signed”, as defined under The Electronic Information and Documents Act, 2000, S.S. 2000, c. E-7.22, as follows:

  • the presence of some type of information on emails;
  • the information is in electronic form;
  • the information was created or adopted in order to sign the document;
  • the information was to be attached to or associated with a document.

Finally, an agreement was found in the Alberta case of Leoppky v. Meston[3], where the courts considered whether an in-writing requirement and a signature requirement was met under the Statute of Frauds in the context of a family law case and sale of land. The court held that both the writing and signature requirements were met and the defendant’s email with her name typed was sufficient to constitute an electronic signature.

In each of these jurisdictions, they have legislation similar to s.19 of the Manitoba Act.

Formation of a Contract – Acceptance

Since it has been shown that an email exchange can lead to an agreement or contract, we now must look at whether or not a contract exists.  At issue are the general formation principles of contract law, being offer and acceptance.

For an acceptance of an offer to be legitimate, it must be an unqualified and unequivocal expression of assent to the terms of an offer. However, acceptance need not be in express terms and may be found in the language or conduct of the acceptor. As acceptance is gauged objectively, an acceptance must be one which a reasonable person apprised of the circumstances could confidently understand to be an acceptance of the offer.

In the case of Fusarelli v. Dube[4], a solicitor sent an email to the other side and stated that “I can get it settled”. The court found that (aside from the fact that the lawyer was unable to settle the matter on his own due to lack of authority) the words lacked finality. Therefore the agreement in question was not binding.

An offer is also not accepted where a future intention to accept the offer is made. For example, in the case of Colberg v. Braunberger[5], the defendant stated “it looks like we have a deal”. Subsequently another party’s higher offer was accepted. The plaintiff brought an action, and tried to sue for specific performance, but the court held at para 37:

… there never was an acceptance by the defendant of the plaintiff’s conditional offer. At most the defendant told the plaintiff that “it looks like we have a deal”. This is not the same as saying that “we have a deal”.

The fact that the plaintiff understood that the item was being sold in an auction type of sale was also taken into account.

As stated above, acceptance may occur by conduct, rather than language. An example of this would be if a party commenced work, and the other party did not stop the work.  Implicit in the second party’s conduct is an acceptance that the work should be performed.  Mere inaction or silence does not amount to acceptance, however. As per Owen-Flood J. in the case of Resource Realty ltd. v. Swiftsure Developments Ltd.[6] at paragraphs 23 and 24:

However, as held by the Supreme Court of Canada in Schiller v. Fisher, [1981] 1 S.C.R. 593 (S.C.C.), acceptance must be communicated to the offeror before a contract can be found to exist:

[g]enerally, the fact of acceptance of an offer must be communicated to the offeror before acceptance is complete and a binding contract is created.

24      As stated by Professor Waddams in The Law of Contracts, Fourth Edition (Toronto: Canada Law Book, 1999) at p. 67,

Ordinarily, therefore, silence will not operate as an acceptance even though the offeree should prove an intention to accept. This is not a technicality but part of the requirement of a bargain. No reasonable person, on receiving a proposal that looks for a reply, considers the bargain concluded until the manifestation of assent. Nor will a reasonable offeror ordinarily consider that silence on the part of the offeree manifest’s the latter’s acceptance [references omitted].

A future intention to accept an offer cannot be accepted by one party inferring from the silence of another that their offer has been accepted.

Subject to any additional facts surrounding the exchange of emails, it may be reasonable for a Court to conclude that an email discussion between parties in negotiation has the effect of creating a formal contract or agreement, however, the facts are highly relevant to a determination of whether a formal contract exists. The language in the emails must be carefully considered.

 

[1] 2015 CarswellBC 854 (B.C. C.A.)

[2] 2017 CarswellSask 154 (Sask. Q.B.), affirmed 2017 CarswellSask 484 (Sask. C.A.),

[3] 2008 CarswellAlta 60 (Alta. Q.B)

[4] 2005 CarswellOnt 5245

[5] 1977 CarswellAlta 433, 9 A.R. 158

[6] 2005 CarswellBC 413, 2005 BCSC 229, [2005] B.C.W.L.D. 2236


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Kristen Wittman
Kristen Wittman
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