On June 8th, 2023, a Canadian Court in a recent case ruled that a “thumbs-up” emoji sent in a text conversation counts as a valid expression of acceptance of the contract. The rationale of the ruling was based on the merits and the background of the parties involved. While this may be considered a small progressive step towards the inclusion of non-traditional, digital forms of communication in the legal domain, it may offer avenues for misuse and complications in interpretation. The first segment of this article delves into the facts of the matter and the ratio of the order of the Canadian court. The second segment explores the ruling’s implication on Indian contract law, the potential issues it may cause, and key learnings from the ruling.
Background
As per the facts in South-West Terminal (“SWT”) v. defendant Achter Land & Cattle Ltd.[1], The plaintiff (SWT) was a regular customer of the defendant (Achter) and had contracted to purchase 87 metric tons of flax for a predetermined price, with a stipulated timeframe for delivery of the goods. The plaintiff prepared the contract, affixed the signature of its authorized signatory, and sent an image via text message from its cell number to the defendant, with a message saying, “Please confirm flax contract”. In response, the defendant sent a thumbs-up icon from his cell number.
The defendant did not deliver the goods within the stipulated timeframe and disputed the validity of the contract on the grounds that the “thumbs-up” emoji did not imply acceptance of the contract.
However, the Court found that a valid contract was executed between SWT and the defendant through his acceptance video the thumbs-up emoji, and that the defendant breached the contract by failing to fulfill the conditions of the contract. Damages to the tune of USD 82,000 were imposed on the defendant.
Rationale
In passing this decision, the Court delved into the following aspects:
[1] 2023 SKKB 116, decided on 08-06-2023.
- Pre-existing Business Relationship – Achter and SWT had a long-standing business relationship, wherein the parties were regularly involved in various similar transactions.
- Modus Operandi – The Court found that there was a pattern in the manner purchase contracts were executed between the parties. In the past, SWT would share the contract with a caption such as “Please confirm terms of the contract”, to which Achter usually replied succinctly with phrases such as “looks good” or “yup”.
- Consensus ad idem – In the past, the parties clearly understood such concise communication implied confirmation of the contract, thereby creating a valid obligation.
- The Bystander Test – In determining meeting of minds, the Court applied the bystander test wherein it is not relevant what the defendant intended to convey by means of the “thumbs-up” emoji, rather the impact the communication has on a reasonably informed bystander witnessing the transaction.
- Dictionary meaning of the emoji – The court observed that the dictionary meaning of the “thumbs-up” emoji stated that – “it is used to express assent, approval or encouragement in digital communications, especially in western cultures”[2].
Based on the above rationale, the Court found that a “thumbs-up” emoji is a non-traditional, electronic form of expressing acceptance under The Electronic Information and Documents Act, 2000 (“EIDA”)[3], and therefore – a valid contract was executed between the parties and the defendant was liable for breach of contact.
2. Implications of this Ruling on Indian Contract Law
Acceptance under Indian Contract Law
Section 2(b) of the Indian Contract Act 1872 (“the Act”), defines a “promise” as follows:
“When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.”
Therefore, acceptance exists where assent is signified by the party which is accepting the contract. To further understand how acceptance is signified or expressed, we must consider the elements of valid acceptance.
[1] SCC Online Blog, When a Canadian Court ruled that “thumbs-up” emoji constitutes a valid non-traditional means to convey acceptance of a contract, 8th July 2023. Link [1] SS 2000, cE-7.22
Expression of Acceptance shall be Usual and Reasonable
The elements of valid acceptance are enshrined in Sections 7 and 8 of the Act. Section 7(2) stipulates that “acceptance must be expressed in some usual and reasonable manner” unless the proposal prescribes the manner of expression of acceptance. However, this Usual and Reasonable Test is averse to change with the emergence of new methods of communication.
For example; In 2023, if B offers to buy a bottle from A for Rs 200 via email communication, and if A accepts to sell the bottle at Rs 200, in unambiguous language, via email or by means of a letter to B or via text message, we may interpret such communication as usual and reasonable, considering these are common methods of contemporary communication. However, to understand this better, if A expresses acceptance to sell by means of Morse code or a rare ancient script, such communication is bound to fail the Usual and Reasonable Test since neither are considered usual and reasonable methods of communication. In the same light, the advent of emojis and text messaging jargon has given rise to newer forms of digital communication, which may need appropriate interpretation to determine their usage in expressing acceptance of a contract.
Interpretation of Emojis for Expression of Acceptance
Today, emojis have become a key part of modern communication, creating a bridge between emotional expression and written text. While their use on digital platforms is widespread, it’s important to understand their implications when expressing acceptance of an offer under Indian law.
- The use of emojis may lack clarity in conveying precise intentions. Emojis are often open to wide interpretation and can be ambiguous, leading to potential misunderstandings between the parties involved in the contract, as observed in the case discussed in the first segment.
- The Indian legal system is accustomed to traditional forms of communication like written letters. While the law recognizes modern forms of communication, such as emails or text messages, the acceptance of an offer through emojis might not be interpreted favorably and may result in complications.
In 2018, the Madras High Court, in Linga Bhaskar and others vs. the State through the Inspector of Police[4], found that emojis may be used to convey a myriad of emotions and ideas and that their use on digital platforms cannot be treated as an overt act on others.
- Cultural differentiation may significantly impact the uniformity in the use of emojis. Considering the significant cultural diversity in India, the meaning/use of an emoji could differ based on the state where business is being conducted.
Key Takeaways
[1] Cr. No. 206 of 2017 – pronounced on 05.06.2018
In contract formation, it is crucial to ensure complete clarity and consensus ad idem; and to overcommunicate if need be. A few crucial pointers are as follows:
- Where the parties are accustomed to using emojis for regular business communications, they must be combined with clear, unambiguous written statements to explicitly convey their intention.
- Considering that there is no uniform code for the interpretation of emojis on digital platforms, aligning both parties on the meaning of the emojis used is helpful in preventing misunderstandings at later stages. However, it is altogether better to avoid the usage of emojis and other ambiguous terminology in business communication.
- In adherence to Section 7(2) of the Act, the contract can prescribe methods of expressing acceptance of the contract that are suitable to the parties involved.
- A comprehensive definition clause that details the interpretations of the terminologies used in the contract can ensure additional clarity.
Article by Mr. Sumer Karekar under the aegis of Adv Shankarlal Raheja and published on 4th September 2023 on his website www.shankarlalraheja.com
[1] 2023 SKKB 116, decided on 08-06-2023.
[2] SCC Online Blog, When a Canadian Court ruled that “thumbs-up” emoji constitutes a valid non-traditional means to convey acceptance of a contract, 8th July 2023. Link
[3] SS 2000, cE-7.22
[4] Cr. No. 206 of 2017 – pronounced on 05.06.2018
