Contract was created in casual email

A recent case shows how easy it is for a contract to be created in what may seem a fairly casual exchange of emails.

In the case, Nicholas Prestige Homes, an estate agent, sought damages in respect of lost commission from their former client Sally Neal. She had entered into a sole agency agreement with them but ended up selling her property through another agent.

Nicholas Homes argued that the contract had been confirmed in an email stating that they would have sole selling rights over Ms Neal’s property from 1 January 2007. Their terms of business, setting out when their commission would fall due, were attached to the email. Ms Neal e-mailed her reply, saying “that’s fine, look forward to viewings”. The agent said that this amounted to an acceptance of their terms.

Despite her emailed response, Ms Neal argued that no sole agency agreement existed and she had not fully read the email or the attached terms.

The property was ultimately sold through a different agent but during the period in which Nicholas Homes (according to their original email) envisaged that a sole agency agreement would be in place. They brought proceedings to claim an agency fee and the case later went to appeal.

The appeal court upheld the earlier findings in confirming that a contract had been created by the emails. The court found that, had a different agent not been appointed, Nicholas Homes themselves would have sold the property to the buyer. Accordingly, they won damages for the lost opportunity of selling the property.

The case emphasises the need for care and caution when dealing with suppliers via email. Even the briefest exchange (in this case, the crucial email was only six words long) may create a contract … with the obligations and liabilities that flow from it.

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