Email Communication And Formation Of Contract

Electronic communication continues to grow and, by most observations, it is becoming indispensable in our social discourse. The advantages of instantaneous communication allow for people to connect quicker and expand their circle of contacts. At the same time, this access to instantaneous communication carries risk. A flippant or ill-tempered remark sent in the course of a speedy exchange could later prove embarrassing or destructive to a relationship. Should the same cautionary tale apply to business negotiations? Can a careless or poorly considered email or text bind you to an agreement that you did not intend?

In two recent cases, appellate courts closely scrutinized the role that email exchanges played in business relationships. The first case, Cana v Standard Innovation, 2018 ONCA 145, was heard by the Ontario Court of Appeal and it had to decide if two separate agreements were created amid several email exchanges between the parties. The Defendant, Standard Innovation, was the patent holder of a popular sex toy called "We-Vibe". The Plaintiff, Cana, was a distributor of adult sex health and wellness products. The parties entered negotiations for Cana's exclusive distribution of the We-Vibe. The relationship eventually soured and Cana sued Standard Innovation for breach of contract, among others claims. In that claim, Cana alleged that three different agreements formed, only two of which are of concern here:

A Mainstream Agreement whereby Cana would be the exclusive distributor of the We-Vibe in mainstream stores such as drug stores; and An Adult Stream Agreement whereby Cana would be the sole distributor of the popular toy through adult sex shops and websites. In analyzing the Mainstream Agreement, the facts identified that between August and September 2009, Cana signed one copy of the Mainstream Agreement while Standard signed an identical yet separate copy. There was no one document that could be clearly identified as the one contract for the Mainstream Agreement. Subsequently, the parties exchanged emails discussing and modifying some of the terms of the documents that had been signed. Cana argued that the Mainstream Agreement was formed when both parties signed a copy of the document. Standard Innovation, pointed to the subsequent email exchanges and discussion of the terms as proof that there was no agreement, but rather an ongoing negotiation.

In the Adult Stream Agreement, the parties signed different copies of the document...