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A judge in a Canadian court case has ruled that a thumbs-up emoji constituted a legally binding acceptance of a contract, ordering the defendant, who failed to fulfil their end of the deal, to pay more than $82,000 in damages. 

In November 2021, buyer South West Terminal Ltd (SWT) sought to purchase 87 metric tonnes of flax from seller Achter Land & Cattle Ltd at a price of $669.17 per tonne.

The two companies had dealt with each other frequently, where it had become standard practice for SWT to text the Achter representative with a photo of a contract and a text message asking to confirm the contract. 

Achter would often respond with short phrases of acknowledgment, such as “Looks good,” “OK,” and “Yup.”

In this particular instance, the response was a thumbs-up emoji. 

When Achter failed to deliver the flax seed by the required date, SWT was forced to purchase the amount at the prevailing market price at the time, which had risen to $1,614.09 a tonne, to meet its own obligations with customers.

SWT brought the case forward in an effort to recover some of the financial losses they suffered as a result of the breach of contract. Achter claimed that the emoji message was not intended to convey acceptance of the contract but merely that they had received it and would review it in time.

The legal question that arises is whether there was ever a contract between the parties.

In the court decision handed down in June, the Justice stated that “There was a valid contract between the parties that the defendant breached by failing to deliver the flax.

“This court readily acknowledges that a ???? emoji is a non-traditional means to ‘sign’ a document, but nevertheless, under these circumstances, this was a valid way to convey the two purposes of a “signature” – to identify the signator (with a unique cell phone number) and . . . to convey Achter’s acceptance of the flax contract.”

Previous legal precedents?

English Precedent is not directly applicable to the judgment reached in a Canadian case, but the outcome carries similarities to English case law. Hillas & Co Ltd v Arcos, Ltd, [1932] demonstrates the court’s willingness to diverge from a strict interpretation of terms to protect the contract. 

This is preferable over an interpretation that invalidates the contract. A court cannot interpret beyond the words used, and a thumbs up emoji can be interpreted as acceptance without having to stretch its meaning. 

Lord Wright stated in Hillas & Co Ltd v Arcos Ltd that, “Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise.”

If it is apparent that both parties intended to enter into the contract, there is no further ambiguity, even if the means of communication used is not the norm. 

Intention can be shown through a consistent amount of dealings, as discussed in Hollier v Rambler Motors (AMC) Ltd [1972], a case involving exemption clauses. 

A clause can be implied into a contract if the contracting parties have dealt with each other over a prolonged period in a consistent manner. 

As Lord Tomlin states in Hillas & Co Ltd v Arcos Ltd, if both of the parties were “intimately acquainted in a course of business.” This is applicable to the nature of the dealings in the Canadian court case. The emoji fits with what is arguably a consistent pattern of responses.

Though it is highly unlikely that any of these cases envisioned the use of an emoji in a contract negotiation, new digital communication and trade technology have already rapidly impacted the industry.

Implications for digital trade advancement

This ruling occurred shortly before the UK formally ratified its electronic trade documents bill – a landmark achievement in the push for a digital-friendly legislative environment for international trade transactions. 

Until this bill was passed, trade documents in the UK needed to exist in paper form to be legally recognised – something that still remains the case in many other jurisdictions worldwide.

Discussing the implication of the ???? case, Chris Southworth, secretary-general of the International Chamber of Commerce (ICC) UK, said, “This is a big step forward. The Canadian ruling creates a real opportunity for all of us in trade to get with the programme. 

“Trade currently operates in the same way it did 200 years ago, mostly on paper, when we all know there are far more efficient and effective ways of trading if we use modern technology. 

“Simple solutions like this could help us transform the way we trade and importantly make trade far cheaper, faster and simpler.”

This notion of the power that simple solutions can have in paving the way for trade digitalisation is echoed by other experts.

Enno-Burghard Weitzel, senior vice president of strategy, trade finance digitisation at Surecomp, said, “This is a great example of a judge paving the way for low-barrier digital solutions and showing that trade digitalisation does not need to rely on sophisticated and expensive solutions.

“Trade digitalisation demands willingness, pragmatism, and relentless improvement. Embrace the new, release the imperfect past, and take pragmatic steps for significant benefits.”

Adaptable legislation vital for modern electronic commerce

Technology is well known to advance far more rapidly than the legislation governing it, but, as this thumbs-up emoji case illustrates, legislation can be interpreted in light of the broader operating context.

Luca Castellani, legal officer at the Secretariat of the United Nations Commission on International Trade Law (UNCITRAL), said, “This decision illustrates how solid technology-neutral laws may adapt to changes in business practice and technology. 

“While the use of an emoji to express consent to be bound might not have been foreseen more than 20 years ago, when the Electronic Information and Documents Act was drafted, the ability to identify the core elements to express consent online made the Act future-proof. This is even more relevant as the relevant provisions of the Act are not unique to Saskatchewan or to Canada, but are shared with more than 100 countries around the globe that have adopted the UNCITRAL Model Law on Electronic Commerce.”

As new digital trade legislation becomes increasingly widespread, ensuring that these laws can remain adaptable in the face of future technological advancements will be key to their longevity.

Castellani added, “The decision demonstrates how UNCITRAL texts on electronic transactions, including the Model Law on Electronic Transferable Records (MLETR), may ensure both flexibility in addressing business needs and legal predictability.”