In an attempt to keep pace with advancements in technology and the use of the internet, the law is also moving forward to allow electronic consent and notice in contracts.
The Supreme Court recently heard the matter of FKP v Albion Mill [2017] QSC 322 regarding electronic communication and the effectiveness of giving electronic notice.
In this matter, the seller of a commercial property gave notice to the proposed purchaser through an electronic data room that the land which was the subject of the purchase was on the environmental contamination list.
Under Queensland law, all sellers must notify any buyers if the property they are purchasing is contaminated.
Apart from providing electronic notice through the data room, the seller did not make any further disclosure to the buyer regarding the contamination of the land.
Unfortunately for the buyer, it did not properly read the “fine print” in the electronic notice and signed the contract without realising the property was contaminated.
Shortly prior to settlement, the buyer learnt the land was contaminated and attempted to terminate the contract, claiming the seller did not advise the buyer the land was contaminated.
The seller refuted the buyer’s position, claiming it gave sufficient notice. The seller then sued the buyer for damages in excess of $5 million for breach of contract.
The primary issue for determination by the Supreme Court was whether the notice provided by the seller via the electronic data room was enough, or whether written notice was also required.
The Supreme Court held that the process of providing notice through the electronic data room was sufficient.
They found that for a method of communication to be accepted, both parties had to agree to receive/ give notices in that way. For example, if it was standard between the parties to give information/ notices by written letters posted to an address, this would be considered the “accepted” method of communication. This would also be the case for email, fax and other electronic communication. In this case, the parties agreed for the information to be shared through a ‘data room’ and the court held that this was an accepted method of communication.
The court held the buyer was provided with sufficient notice that the land was contaminated and that he was not entitled to terminate the contract. The sellers received judgement in an amount in excess of $5 million against the buyer with an additional sum for legal costs.
This case shows the changing law with respect to notice and electronic communications and the courts willingness to accept notice by non-traditional means such as email, fax and in this case an electronic data room.
When you are having discussions with another party relating to a contract or any other commercial matter, we strongly recommend that the parties agree from the outset on an accepted method of communication (e.g. by way of email, by way of post, by fax). If you are provided with notice by one form of communication, such notice may be deemed to be approved (whether you clicked on the link or read the email or not).
If you are thinking of entering into a business or commercial transaction, we strongly recommend that you seek legal assistance to ensure you are aware of your legal rights and obligations and any potential risks or issues prior to agreeing / committing to the transaction.
If you’d like to discuss any commercial legal matters further, call Bruce Thomas from our commercial litigation team on (07) 3211 2233 or send us an enquiry using the form below.
