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Online negotiations: emails and contracts

Warren Wackerling and Luke Bull – 23 September 2015

 

Introduction

 

Is ‘online’ the new ‘black’… we shop, watch movies and even do business transactions.  It’s no surprise, a large number of commercial negotiations are also performed online.   Emails can result in essential terms, dates and prices being negotiated in cyberspace.  The Queensland Supreme Court has recognised how business transactions are evolving in a modern world.

 

Facts

 

The defendant was seller of property including a roadhouse, located in far North Queensland. The plaintiff was an interested buyer.

 

In October 2014, the buyer’s representative inspected the roadhouse and subsequently started negotiations by emails being exchanged between the seller’s agent and the buyer’s solicitors.

 

In one particular email, essential terms were agreed upon, including the listed price of $1.6 million plus stock, a 5% deposit, a 60 day settlement and a 40 day due diligence period. A draft contract was also attached to the email

 

The following day, the buyer responded to the email by reply email confirming an offer of $ 1.6 mil ‘subject to a contract’.  The buyer also asked the seller to reply with immediate acceptance – the seller accepted within one hour.

 

The buyer was not aware at that time, that the seller had been negotiating simultaneously with others and was ultimately offered a higher price for the land from another party. 

 

In turn, the seller argued no concluded contract had been finalised or signed as between the buyer plaintiff and the seller.  The buyer disputed this fact and the Court held that the requirements of a contract (offer and acceptance) had been met. 

 

The emails together evidenced the parties intentions and were, although electronic, sufficiently complete.

 

What do I need to be careful about?

 

This case highlights how difficult ‘negotiations’ can be as between seller and prospective buyer in an ‘online’ world of electronic mail.  While sometimes informal or unintentional, words used and delivery methods can be problematic.

 

The best practice of course, is to be concise when purporting to make an ‘offer’ and even moreso, be clear on the face of it when an offer is ‘accepted’ and any conditional aspects to accepting the offer.

 

Make sure your intent is clear before you hit ‘send’ and never assume either yes or no to the question ‘am I doing this right’.

 

Download the decision here. 

This article is for general information only and should not be relied upon as a substitute for specific legal advice.