Using Shorthand in Contract Discussions Could Land You in Some Deep Trouble💩

By Hank Lerner | Aug. 11, 2023 | 4 min. read

In 2021, a grain buyer (let’s call him Buyer Kent) in Saskatchewan, Canada, texted a farmer (let’s call him Farmer Chris), a photo of a contract offering to purchase about 87 tons of flax and asked him to “please confirm flax contract.” Farmer Chris responded with a thumbs-up emoji 👍. But Farmer Chris never delivered the flax, and the buyer sued.

In court, Farmer Chris argued that the intent of his emoji was merely to acknowledge receipt of the contract as an offer to purchase the flax and that he presumed a full contract would be provided for signature at some later date. Buyer Kent argued that prior contracts between the two had been approved via text using terms such as “looks good” or “yup” and that he presumed the thumbs-up emoji was simply another variant on contract approval by Farmer Chris.

Well… the judge ruled that the “new reality in Canadian society” was that more and more people were expressing themselves via emoji rather than complete sentences or written signatures and that the context of the prior dealings between these parties suggested that the emoji should be interpreted to mean that the contract had been accepted – almost as an electronic signature.

And since you’re wondering, that emoji cost Farmer Chris over $60,000 💰 in damages.

Wow. 😮 Am I right?

Though this decision itself is not binding in Pennsylvania for various reasons, and it doesn’t appear that there are similar decisions (yet) across the U.S., there are still some huge lessons you can apply to your own transactional scenarios.

See if you recognize these examples (based on actual calls, as per usual):

  • The buyer submits an offer. The listing agent texts back, “just what the seller wanted; should be signed tomorrow.” Then the seller gets another offer that they actually accept in writing and notify the buyer broker about that in the morning.
  • The buyer agent, who gets the above text from the listing agent, leaves a voicemail for their own buyer client that says, “Congrats – you’ve won the house!” The buyer assumes that means a signed contract was returned, so they turn in their job resignation, only to be told the next morning that nothing had ever been signed and the seller chose another offer.
  • Agents discuss the terms of a potential counteroffer, then the listing agent sends the written counteroffer and the buyer agent replies with “Perfect!” The next day, the buyer agent says the buyer won’t be accepting/signing off on the counter.
  • Settlement is set for Tuesday morning, but the buyer is running into last-minute issues with the lender. On Monday, the buyer agent texts “lender issues – need to close on Friday.” The listing agent does not answer. Closing does not occur on Tuesday, and on Wednesday, the listing agent sends a notification that since the buyer didn’t come to closing, the contract has expired and the seller wants to keep the deposit.

What Are Those Lessons?

The biggest one is that, for the most part, if it isn’t written and signed, then it doesn’t exist.

Per the representations paragraph of PAR’s agreements of sale, “All representations, claims, advertising, promotional activities, brochures or plans of any kind made by Seller, Brokers, their licensees, employees, officers or partners are not part of this Agreement unless expressly incorporated or stated in this Agreement. This Agreement contains the whole Agreement between Seller and Buyer, and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise, of any kind whatsoever concerning this sale. This Agreement will not be altered, amended, changed or modified except in writing executed by the parties.”

As a practical translation… if the Agreement isn’t signed yet then there is no Agreement. Once the Agreement is signed by both parties, if proposed changes aren’t agreed upon and signed by both then there are no changes. Texts, emails, conversations, whatever – none of them should count without a document signed by all parties.

So… don’t make promises that aren’t yours to make, and don’t rely on apparent promises that aren’t contained in written/signed documents. Take the time to discuss and write out (on a signable form) anything the parties want to accomplish so they have the ability to do it right and not just guess at what the other side may have meant from a text exchange. Not only are you putting your clients at risk by creating a lack of clarity in the transaction, but the odds are good that one or both agents/brokers who communicated without getting things in writing could find themselves the subject of an ethics or licensure complaint or a possible lawsuit, so it could be bad (and expensive) all around.

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