Emails can form binding contracts

Emails can form binding contractsIn the 21st Century, email has become an important means of communication and, in fact, almost essential for effectively conducting any business; but the apparent informality of the medium can often give the misguided impression that it is somehow of lesser legal significance. A recent decision of the Brisbane Supreme Court underscores the importance of ensuring that all email communication is carefully crafted and well considered because emails themselves can be sufficient evidence in writing of an agreement, to satisfy the legal requirements of the Property Law Act.

In the case before Justice Martin, Stellard v. New Queensland Fuel Pty Ltd, the parties had been negotiating for the sale and purchase of a service station and site. The negotiations resulted in an email being sent by the proposed purchaser which made an offer which was said to be “subject to contract and due diligence as previously discussed”. The proposed sellers’ representative responded by email saying ‘we accept the below offer which we understand will be subject to execution of the contract provided”.

Later, when the seller had a change of heart, a dispute arose as to whether, in the absence of a signed contract, there was in fact a valid and binding contract which was sufficient to satisfy the relevant statute of frauds. The statute is legislation which requires a contract for the sale of an interest in land to be in writing and signed by the parties, unless a rare exception applies.

In his decision, Justice Martin considered the Electronic Transactions (Queensland) Act 2001 and applied it to the facts and circumstances and found that the email exchange was sufficient to satisfy the legal requirements and that a contract had been formed.

For those of us who use email regularly in the course of our business activities, the lesson is simple. Emails must be carefully considered, appropriately structured and should fully and properly articulate your position so that there can be no misunderstanding. If an important subject matter is the subject of the exchange, perhaps it is best to not hit send until it has been proof read a couple of times!

Travis Schultz
Practice Group Leader
STOLaw, Part of the Slater and Gordon Group
Ph: (07) 5413 8900
Fax: (07) 5413 8958

Comments are closed.