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July 17, 2023Thumbs Up, Bruh - Informality and the New Art of Contract Formation
By: Michael Ilg
Case Commented on: South West Terminal Ltd v Achter Land, 2023 SKKB 116 (CanLII)
Saskatchewan grain contracts rarely attract international media attention, but an exception
occurred recently after a judge held a farmer liable for damages under a contract entered into by
emoji. It was not even a particularly cute or imaginative emoji, simply a humdrum ‘thumbs up’
. Nevertheless, this solitary little did quite a lot of work in the court’s eyes; not only did it
signify acceptance of a contract offer, it also constituted the signed endorsement of a written
document, thus satisfying the requirements of The Sale of Goods Act, RSS 1978, c S-1. This short
post examines the decision of the King’s Bench for Saskatchewan in South West Terminal Ltd v
Achter Land (2023 SKKB 116) and suggests some potential implications, with a particular
emphasis on the formality requirements of contract formation.
Background
The plaintiff, South West Terminal Ltd (SWT), is a grain and inputs company. The defendant,
Achter Land & Cattle Ltd, is a farming corporation owned and operated by Chris Achter (Achter).
[Although Achter Ltd and Chris Achter are separate legal identities, for the purposes of this post I
will refer to Achter as a single party]. SWT had previously purchased grain from Achter through
various deferred delivery grain contracts since approximately 2012.
Throughout their past dealings it was common for the agent of SWT, Kent Mickleborough, to
negotiate with Achter. After agreeing upon terms, Mickleborough would draw up a written sales
contract for the particular grain, such as durum wheat, sign it, and then send via text message to
Achter for confirmation, as in: “Please confirm terms of durum contract.” In response, Achter
texted back “Looks good”. On a subsequent occasion, Achter responded to the same process with
an “Ok”; and on another occasion he replied “Yup”. On each of these separate occasions, Achter
delivered according to the negotiated terms.
On March 26, 2021, Mickleborough sent out a ‘text blast’ to a number of producers, including
Achter, offering to purchase flax seed at a price of $17 per bushel with delivery in the fall. Shortly
thereafter Achter and Mickleborough discussed the flax seed purchase by phone and agreed upon
the sale of 87 metric tonnes of flax seed at a price of $17 per bushel with a delivery period of
November 2021. As he had done previously, Mickleborough told Achter that he would “write up
the contract” and send it to him by text so that Achter could confirm the contract via text.
Mickleborough wrote up the contract, signed it, took a photo of the document and texted it to
Achter. Achter texted back .
THE UNIVERSITY OF CALGARY FACULTY OF LAW BLOG
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, Achter did not deliver any flax seed. The spot price for flax on November 30th, 2021 was $41.00
per bushel. The plaintiff sued for damages of $82,200.21 plus interest and costs. The defendant
Achter countered that: i) there was no acceptance, or consensus ad idem; ii) the agreement was not
compliant with the requirements of The Sale of Goods Act; and iii) the agreement should fail for
uncertainty. I will concentrate on the first two issues in this post, as I think these are of more
general applicability; and frankly the defendant’s arguments that the term for delivery as ‘Nov’
was too vague is untenable for a future delivery contract involving agricultural produce. As the
well-known House of Lords decision in Hillas & Co Ltd v Arcos Ltd (1932), 147 LT 503 HL,
indicated, contracts for the supply of natural products such as timber will necessarily have an
implied element of flexibility in regards to exact delivery date.
The Ruling
1. Consensus Ad Idem
Justice Timothy J Keene, in delivering a summary judgment, ruled that Achter’s use of the thumbs
up emoji constituted contract acceptance (at para 37). The common law approach to the
interpretation of contract formation is an objective view of subjective thoughts and decisions. What
matters is not what a promisor or promisee thought at a certain moment; what matters is whether
their conduct demonstrated an intention to be bound from the perspective of a reasonable onlooker.
As Justice Keene noted, citing the Supreme Court of Canada’s decision in Ethiopian Orthodox
Tewahedo Church of Canada St Mary Cathedral v Aga, 2021 SCC 22 (CanLII): “The question is
not what the parties subjectively had in mind, but rather whether their conduct was such that a
reasonable person would conclude that they had intended to be bound.” (at para 18). To come to a
determination as to what an objective or reasonable bystander would determine as to the use of the
thumbs up emoji the court relied upon i) a basic dictionary description of meaning, and; ii) past
dealings.
The judge wryly noted that the parties had been engaged in “a far flung search for the equivalent
of the Rosetta Stone in cases from Israel, New York State and some tribunals in Canada, etc. to
unearth what a emoji means.” (at para 30). The court preferred a simpler approach and drew
upon the dictionary.com definition for : “it is used to express assent, approval or encouragement
in digital communications, especially in western cultures.” (at para 31). The essence of is
affirmation, the court found (at para 36).
As to affirmation, the defendant Achter argued that his use of the thumbs up simply denoted
receipt, and that Achter would subsequently review the document. The judge disagreed, holding
that the parties had established “an uncontested pattern” of “binding deferred delivery purchase
contracts” through a process in which “curt words” served as “confirmation of the contract, not a
mere acknowledgement” of receipt (at para 21).
2. Formality
Section 6 of Saskatchewan’s The Sale of Goods Act (SGA) requires that for a contract for sale of
goods above the value $50 to be enforceable it must either be partly performed or conveyed in
“some note or memorandum in writing of the contract is made and signed by the party be charged”.
THE UNIVERSITY OF CALGARY FACULTY OF LAW BLOG
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