In the case of University of Plymouth v European Language Center Limited, the Court of Appeal was called on to consider whether the parties had concluded a contract by email.
European Language Center (ELC) ran English language courses. The University provided them with accommodation for this purpose. The parties had worked together this way for some years. Each year they would enter into a new contract for the accommodation that was to be provided in that year. The contract was always reduced to writing and signed by both parties.
In May 2005, the University sent an email to ELC saying that it was able to provide accommodation for 200 students that year. Several weeks later, it sent an email to ELC saying that, in fact, it was only able to offer accommodation for 100 students. ELC subsequently argued that the first email was a binding offer which it had accepted during a telephone conversation with the University. It was clear that the telephone call had happened but there was no documentary evidence of the contents of that call. ELC argued that this had formed a binding contract with the University and the University was bound to provide accommodation for 200 students.
On the facts of the case, the Court of Appeal held that the email of May 2005 was not an offer but formed merely part of the preliminary negotiations between the parties. This conclusion was supported by the fact that the parties had always reduced their contracts to writing in the past and did not consider themselves bound contractually until this had been done. The court held that there was no intention on the part of the University to create legal relations by its May email. Even if the email had been an offer, there was no evidence that ELC had unequivocally accepted it.
Although the case was decided on its facts, it is a useful reminder of the pitfalls of relying on informal telephone and email exchanges to establish a binding contract. To avoid the problems that arose in this case, it is always advisable to confirm important telephone calls in writing or by email. Contracts should, where possible, be reduced to writing and signed by both parties. If email is to be used as a means of contracting, it should be made clear whether a particular email is intended to constitute an offer or an acceptance of an offer. To avoid the possibility of being contractually bound by merely informal email exchanges, it should be made clear that emails are not intended to create legal relations and this can be done by using the phrase 'subject to contract' in the body of the email.