Latest Legal News - Contracts and Disputes (April 2011)

Contract disputes are a notoriously tricky area of law. With the advent of modern technology, negotiations are taking place with increasing regularity by email and fax, As such it is imperative for any client intending to create a legally binding arrangement to pay careful attention to any pre-contract actions and email correspondence.

The decision in the recent Court of Appeal case of Immingham Storage Co Ltd v Clear Plc [2011] EWCA Civ 89 illustrated the Court's willingness to consider in detail emails passing back and forth between the parties when determining whether a binding contract had been made and on what terms.

The Claimant provided storage facilities and sent the Defendant a quotation and general conditions following email exchanges in relation to availability and cost. The quotation provided for a formal contract to follow in due course. The Defendant confirmed that it wished to proceed and faxed back the quotation signed. The Claimant then sent a confirmation accepting the Defendant's offer to take up storage and stating a full contract would be sent for signature which it duly was.

The Defendant argued that the 'full contract' eventually sent by the Claimant was not signed and therefore no binding contract existed. However, upon considering the chain of emails leading up to the 'full contract' being sent out, the Court held that the requisite offer and acceptance had already been made and the chain of correspondence showed the necessary intention to create a contract. As the 'full contract' corresponded with the terms already agreed, the Court held that it had no bearing on the contract which had already been concluded.

On a practical note, clients should carefully consider the content of email exchanges during the negotiation period, or even earlier. This case shows that the Court will look for intention of the parties in email exchanges and whether offer and acceptance have already taken place, regardless of a 'full contract' being signed. Emails could unwittingly prove crucial in the Court determining whether a legally binding contract has been created.

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