From Ink to Emojis: The New Era of Enforceable Contract Signatures
In its recent decision in Achter Land & Cattle Ltd. v South West Terminal Ltd., 2024 SKCA 115, the Saskatchewan Court of Appeal upheld the Court of King’s Bench decision in finding an enforceable contract relating to the sale of grain between two parties and that a thumbs-up emoji satisfied the signature requirements of s.6 of The Sale of Goods Act, RSS 1978, c S-1.
Background
Achter Land & Cattle Ltd. (“ALC”) is a farming corporation that grows and sells grain. South West Terminal Ltd. (“SWT”) is in the commodities business and has been purchasing grain from ALC since 2012. Over the years, ALC and SWT entered and completed between 15 to 20 contracts, which were all in SWT’s standard form “Deferred Delivery Purchase Contract” consisting of a double-sided single sheet of paper.
Beginning in 2020, ALC and SWT entered into several contracts in the terms of this standard form by exchanging text messages. In 2021, after a series of verbal discussions regarding ALC selling flax to SWT, an employee of SWT sent a text message to Mr. Achter, the owner of ALC, with a photograph of the front page of the contract and the request that Mr. Achter confirm the flax contract. Mr. Achter replied with a text message that contained only a thumbs-up emoji.
After several months, Mr. Achter advised the employee of SWT that ALC did not consider itself bound to deliver flax to SWT because he had not signed the alleged contract. ALC ultimately did not deliver the flax to SWT and as a result, SWT commenced an action against ALC seeking damages for breach of contract.
The Saskatchewan Court of King’s Bench concluded that a valid contract had been formed between the parties. Section 6(1) of The Sale of Goods Act provides that a contract for the sale of goods of the value of $50 or more “shall not be enforceable by action” unless there is part performance of it or “unless some note or memorandum in writing of the contract is made and signed by the party to be charged or his agent in that behalf”. The judge found that the flax contract was in writing and was signed by both parties for the purposes of The Sale of Goods Act, and that the signature requirement was met by the thumbs-up emoji from Mr. Achter. The judge awarded damages of $82,200.21. ALC appealed to the Saskatchewan Court of Appeal.
The Saskatchewan Court of Appeal
The principal issue on the appeal was whether the signature requirement found in s.6(1) of The Sale of Goods Act was satisfied by a text message containing a thumbs-up emoji.
The Saskatchewan Court of Appeal found that ALC and SWT intended to form a binding contract, as evidenced by the history of the parties’ dealings with each other. The court noted that while a thumbs-up emoji is capable of being a message of mere acknowledgement of receipt, the question was whether a reasonable observer, knowledgeable of the relevant circumstances, would conclude that Mr. Achter’s use of the thumbs-up emoji constituted acceptance of the contract with the intention of creating a legal relationship. The court indicated that the lower judge carefully assessed whether, in the context of the complete factual matrix of the surrounding circumstances, the parties had displayed an objective intention to enter into a contract.
The court highlighted that the lower court’s reasons reflected the reality that human communication is often subtle, and that words, phrases, and symbols carry more than one meaning that the law has long accommodated for. The inclusion of an emoji in one part of the communication merely adds a “modern twist” in how courts interpret various communication methods between individuals.
ALC argued that the lower court erred in finding that the contract was signed as re quired by The Sale of Goods Act, by relying on The Electronic Information and Documents Act, 2000, SS 2000, c E-7.22 (“EIDA”), which defines an electronic signature. The court emphasized that little is to be gained by fixating upon the idea that a signature is synonymous with a handwritten name.
The court repeated the four requirements for electronic communication to qualify as an electronic signature under the EIDA:
(1) the presence of some type of “information” on the communication;
(2) that such information may be in electronic form;
(3) the information must have been “created or adopted [by the person] in order to sign a document”; and
(4) the information must be “attached to or associated with the document”.
The court concluded that the first, second, and fourth parts of the EIDA’s definition of an electronic signature were met in this case through the use of a thumbs-up emoji and the accompanying metadata. With respect to the third requirement, when considering the text messages along with the surrounding circumstances, the thumbs-up emoji expressed Mr. Achter’s agreement to the contract, and the act of sending the emoji with the metadata, identified Mr. Achter as the person expressing that agreement with that intention. Mr. Achter’s text message fulfilled the role of a signature, as outlined in s.6(1) of The Sale of Goods Act, just as effectively as if he had signed his name on a printed copy of the contract.
ALC’s appeal was dismissed. However, Justice Barrington-Foote, in dissent, disagreed with the majority’s reasoning and would have allowed the appeal. He did not agree that Mr. Achter signed the contract by sending the text containing the thumbs-up emoji. He indicated that to characterize the metadata that identifies the source of a text message – the text message address – as a signature, would be tantamount to the repeal of s.6(1) of The Sale of Goods Act.
Ultimately, this decision confirms the importance of considering the factual matrix and surrounding circumstances in determining the parties’ objective intention to form a contract.
Nonetheless, ALC has filed an application for leave to appeal to the Supreme Court of Canada, meaning the highest court in Canada may give a thumbs-down to the use of emojis as a valid form of acceptance in contract formation.
