Contracts In A Digital Age: Can Text Messages And Direct Messages Constitute A Legally Binding Agreement?

In an age of increased digital communication – whether it be via text message, or social media direct messaging – it can become increasingly confusing as to whether these digital message exchanges can constitute a legally binding agreement between two parties. In order to determine whether such an exchange is legally binding, it is important to consider whether , the exchange contains all of the essential elements of a legally binding contract enforceable by law.

WHAT ARE THE ESSENTIAL ELEMENTS OF A CONTRACT?

Offer and Acceptance: One party to the agreement must make a clear offer to the other party, who must unambiguously accept that offer. In the context of digital messages, this exchange may occur by one party texting the other an offer with the other person responding with the acceptance of that offer, demonstrating that they affirm the conditions offered.
Consideration: Consideration in the context of a contract refers to the benefit that the parties will receive in entering into the contract. Consideration may take the form of promising to take a particular action, promising not to take a particular action, goods, services, or property. In a digital messaging exchange, if the parties agree on a price to be paid or a service to be provided, consideration will be found to exist in the messages.
Intention to Create a Legal Relationship: There must be evidence in the digital message exchange of both parties demonstrating an intention to form a legal agreement based on the terms of their messages.
Certainty and Completeness: The details contained in the message exchange must be certain and complete in regard to the essential terms of agreement; for example, a price, a quantity of items, a delivery date, and/or an outline of services to be performed. If the terms of the agreement cannot be deemed certain and complete, a legally binding contract will not exist.

While in principle, a text message exchange may constitute a contract if these essential elements are present, there are some types of contracts that require a higher level of formality. One such example is in the sale of property.

Safeguarding your contractual position:
In instances where neither party wishes to be legally bound to the context of text message negotiations, it is important to clearly and completely communicate that they have no intention to be bound by the terms discussed in the message exchange.

For legal advice regarding digital messaging negotiations and agreements, please contact our team at wmd@wmdlaw.com.au or on 9525 8688.