A recent case has highlighted the potential problems when discussing offers by email. In the Supreme Court case of Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd [2015] QSC 119 the buyer made an offer to purchase a petrol station. The offer included price and relevant dates. The offer was made subject to a contract being prepared and signed. It also included a request for a due diligence clause.

The Seller by return email accepted the offer but did not mention the due diligence clause. No contract was ever signed and the parties could not agree on a time period for the due diligence clause. The court held that:

  1. Even though the offer was made subject to a contract being signed, there was a binding contract upon the exchange of emails.  
  2. Even though no agreement was reached on the due diligence clause, this was held to be a condition subsequent to the contract. In other words there was a valid contract but it was subject to the parties agreeing to a due diligence clause at a later date.  
  3. Even though neither of the parties put their signature to a written document the Electronic Transaction Act held that the notation at the bottom of the email was sufficient to comply with the Property Law Act.

Lessons

Don’t do negotiations by email. Otherwise a party may be bound to a contract when they don’t agree to some of the conditions.

Contracts can be sent by email provided that the parties have agreed to receiving documents by email. This will usually be inferred from previous emails. Best practice is always to have a consent to electronic communications form signed by the parties.