In South West Terminal Ltd. v. Achter Land & Cattle Ltd., 2023 SKKB 116, the King’s Bench for Saskatchewan (the “Court”) ruled that a “thumbs-up” emoji can convey acceptance of a contract. The ruling, which has garnered significant media attention, highlights some of the legal issues courts may have to grapple with as emojis and digital images in electronic communications become more commonplace.

Background

A Saskatchewan grain and crop inputs company (the “Plaintiff”) had been purchasing grain from the defendant farming corporation (the “Defendant”) since 2012. Typically, the Plaintiff’s representative would have conversations in person or over the telephone with the Defendant’s representative and agree on a price and volume of grain, and then the Plaintiff’s representative would draft a contract and send it to the Defendant’s representative.

As a result of the COVID-19 pandemic, in approximately March 2020, the Plaintiff’s sales team stopped meeting with grain farmers in person, including the Defendant, and would typically agree to contracts through email or text messages.

In March 2021, the Plaintiff’s representative sent a text to farmers indicating that the company was looking to purchase flax for delivery in the fall of 2021. Following this text, the Plaintiff’s representative spoke with the Defendant’s representative over the phone and then had a contract drafted for the Defendant to sell the Plaintiff 87 tonnes of flax for $669.26 per tonne, with a delivery period listed as “Nov”. The Plaintiff’s representative signed the contract, then took a photo of it using his cell phone and texted the photo of the contract to the Defendant’s representative with a message: “Please confirm flax contract”. The Defendant’s representative texted back a thumbs-up emoji.

The Defendant did not deliver the flax to the Plaintiff in November 2021, and the Plaintiff sued for breach of contract and damages of $82,200.21 plus interest and costs.

The positions of the parties

The parties disagreed as to whether there was a meeting of the minds (consensus ad idem), which is the basis of a contractual obligation. The Plaintiff contended that a thumbs up emoji means “I agree” or “I accept” or some sort of positive affirmation. Meanwhile, the Defendant took the position that the thumbs up emoji meant that the Defendant’s representative acknowledged receipt of the contract, but not that he approved the contract.

Among other things, the Defendant also argued that:

• an actual signature is essential because it confirms a person’s identity and conveys acceptance, and that allowing a simple thumbs up emoji to signify identity and acceptance would open the flood gates to cases asking for interpretations of what various emojis mean; and
• the requirements of s.6(1) of The Sale of Goods Act, RSS 1978, c S-1 (“SGA”) were not met in the circumstances because there was no note or memorandum of the contract made or signed by the parties. Subsection 6(1) of the SGA states:

A contract for sale of goods of the value of $50 or upwards shall not be enforceable by action unless the buyer shall accept part of the goods so sold and actually receive the same or give something in earnest to bind the contract or in part payment 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. [Emphasis added]

Decision

The Court did not accept the Defendant’s arguments and awarded the Plaintiff damages of $82,200.21 plus interest and costs.

There was a valid contract between the parties

The Court held that there was a valid contract between the parties and that the Defendant had breached the contract by failing to deliver the flax.

The Court confirmed that the test for agreement to a contract for legal purposes is not what the parties had subjectively in mind, but rather, whether their conduct would lead a reasonable person to conclude that they had intended to be bound. In considering this question, courts are not restricted to the four corners of the agreement but can consider the surrounding circumstances.

Accordingly, the Court examined the evidence as to the nature and relationship of the parties and found that there was “an uncontested pattern of entering into what both parties knew and accepted to be valid and binding deferred delivery purchase contracts on a number of occasions”. Based on the evidence, which included the Defendant’s representative accepting contracts in the past by texting words like “ok”, “yup” or “looks good” to the Plaintiff’s representative, the Court was satisfied that the Defendant’s representative had intended the thumbs up emoji to signify its acceptance of the flax contract as proposed – and not simply that he had received the contract and was going to think about it. According to the Court, a reasonable bystander knowing all the background would have concluded that the parties had reached a meeting of the minds and intended to be bound by the terms as proposed, just as they had done on numerous other occasions.

The Court rejected the Defendant’s argument that allowing a thumbs up emoji to signify acceptance would open the floodgates to all sorts of cases asking for interpretations of various emojis. While the Court accepted that the facts of the case were novel (at least in Saskatchewan), it stated that it “cannot (nor should it) attempt to stem the tide of technology and common usage – this appears to be the new reality in Canadian society and courts will have to be ready to meet the new challenges that arise from emojis and the like”.

Provisions of s. 6 of the SGA were satisfied

The Court held that the provisions of s. 6 of the SGA had been met (i.e., contract was “in writing” and was “signed” by both parties) and the flax contract was therefore enforceable.

The Court noted that there is jurisprudence that supports the use of email and the use of electronic non-wet ink signatures to identify the person signing and to establish the person’s approval of the document’s contents. According to the Court, there was no dispute that the Plaintiff’s representative electronically signed on behalf of the Plaintiff, but the question was whether the thumbs up emoji of the Defendant representative constituted a “signature”. The Court held that based on the facts of this case – the texting of the contract and then the seeking and receipt of approval was consistent with the previous process between the representatives of the Plaintiff and Defendant to enter grain contracts. The thumbs up emoji was held to be a valid way to convey the purposes of a “signature”, i.e., to identify the signator (the Defendant’s representative using his unique cell phone number) and convey the Defendant’s acceptance of the contract.

Conclusion

The parties’ history of entering into grain contracts undoubtedly played a major role in the Court’s finding that the thumbs up emoji conveyed acceptance of the contract by the Defendant. Nevertheless, while not every dispute of this type will occur in the context of an ongoing commercial relationship, the decision serves as a cautionary reminder that all forms of digital communication, right down to text messages consisting entirely of emojis, can have unintended legal consequences if a court can be convinced that they were reasonably understood to convey the sender’s consent (or other legally significant message). Parties should therefore be as careful when texting or using emojis in commercial communications as they are in their more formal and traditional written communications.