Contract law – Email can trap you!

Contract law – Email can trap you!
Did you use the “out of office assistant” to notify people that you were away during the Christmas Break?  Ironically that automatic reply may be proof that you received an email that, you did not in fact receive.  Proof of receipt by the receiving system may be enough to show receipt by you.  We are governed by both the contracts we sign but also by contract law.  The contract does not stand by itself in a vacuum.   Contract Law affects all of our dealings with each other.  If you are entering into a contract of any kind you should see us first for a fixed fee quote.  Contact Riba Business Lawyers

The problems that we can experience with email notices are an example.

There are legal problems associated with using email to make contracts and further problems are associated with issuing notices by email under a contract.  Those problems relate to

  1. whether an email notice is a valid written notice and,
  2. the timing of receipt by the intended recipient. Is the email received when it is received to, the server, the computer or when the recipient reads it?  Many contracts specify required time frames. If an email is used then it is essential that the time of receipt can be identified.
If a contract is to be made by email the parties must consent.  It is not sufficient for that consent to be written into the contract as the consent must be given, before the contract is made.

Many contracts contain clauses that people rarely bother to read.  Even lawyers tend to gloss over the so called boiler plate clauses as these are added to almost every contract.  One of these clauses sets out the method by which one party to a contract must provide a notice to the other party.  Non compliance with these requirements may make the notice invalid.

To avoid disputes about whether a notice has in fact been given, contracts often include a requirement for notices to be given in writing.  Is an email notice a notice in writing?

The other problem of course is that some contracts such as land contracts are required by legislation to be put in writing and are not valid if not made in writing.

The Electronic Transactions (Queensland) Act 2001 and Electronic Transactions Act 1999 (Cth) govern electronic transactions and require as we have said prior consent.

The Electronic Transactions Acts can provide some guidance as to when a notice sent by e-mail will be deemed to be received.

The legislation only covers certain circumstances. If however the legislation is applicable and if the recipient provides the sender with its e-mail address and thereby designates an information system, the time of receipt is when the e-mail is received in  the recipient’s mail server (the designated information system).  If no information system is designated then the time of receipt is when the recipient actually receives the message and knows of its existence. This could be very difficult to prove.

Case law makes it clear that instantaneous communications such as facsimile and email, are treated as if parties are in each other’s presence, therefore a contract is not formed until the acceptance actually reaches the offeror and in the case of a facsimile this is when the fax reaches the recipient’s fax machine.

What remains unclear in the case of email is whether the email is received when the e-mail enters the recipient’s domain or when it comes to the attention of the recipient.

Most people understand that in order to have a contract there are several ingredients that must be present including an offer and an acceptance.  Of course, the acceptance of an offer, or the giving of a notice can only be effective if the acceptance or the notice is communicated.  If the communication is by email then the timing of that communication and therefore in the case of an offer the moment of creation of the contract may be difficult to identify.  This has the potential to cause a problem if the offer is subsequently withdrawn.  It is obviously necessary to know if it is the communication of the acceptance or the withdrawal of offer that came first.

Other difficulties with proving delivery include the fact that e-mail systems do not routinely provide an acknowledgement of receipt.  Facsimiles are different in this regard. A request for a delivery receipt from the email sender does not generally give a reliable result.

It may be argued that it is the recipients responsibility if they provide an email address to check their e-mail box. Ironically, if a notice is sent by e-mail and the sender receives an “out of office” auto reply from the recipient, then receipt my be confirmed and the out of office notification may be otherwise irrelevant, just as it is irrelevant that the recipient of a fax is out of the office at the time the fax is received.

The simple solution to these email problems is to avoid this mode of communication in certain circumstances such as during the formation of a contract.  This is the approach that most lawyers take.

Always confirm important emails by post or if appropriate request confirmation of receipt by seeking a response by return email.