A recent Scottish case has provided some interesting food for thought in relation to the conclusion of contracts by email, and the effectiveness of email disclaimer wording which attempts to prevent this from happening.

The case involved the purchase by Edinburgh based sign manufacturers, Baillie Estates, of a printing machine from Du Pont. The main point was whether the contract of purchase was governed by Du Pont's standard terms. Baillie argued that the contract was formed before it saw Du Pont's standard terms - and thus the standard terms did not for part of the contract. Du Pont disagreed.

Du Pont had sent an email that had as an attachment DuPont's commercial proposal on pricing and delivery. Baillie responded with an email saying "go ahead". A couple of days after that, the Du Pont salesman sent the Du Pont standard terms and an invoice to Baillie.

The court decided that the contract was formed when Baillie sent the "go ahead" email, i.e. before the standard terms were sent. Therefore Du Pont's standard terms did not form part of the contract.

Interestingly, there was standard wording in Du Pont's email footers to the effect that its emails were not intended to have contractual effect, unless Du Pont expressly specified otherwise. Although Du Pont decided not to pursue that argument in court, the judge commented that the footer would not have prevented the formation of a contract. He said this was because the footer only referred to the "email", and not to its attachments.

What does this mean in practice?

While this Scottish case may not be followed in England, it does highlight the possibility of a contract being formed by email (perhaps unwittingly), and the potential limitations of standard "no contract" email footers.

For buyers, the possibility of avoiding supplier terms sounds good, but remember that a contact unwittingly formed by email may hurt you e.g. where your own standard conditions of purchase are not included.

The key things to take from this case are:

  • Contracts may be formed by email earlier than you might expect.
  • When negotiating a contract by email, tell the other side about your standard terms as early as possible.
  • Consider rewording standard "no contract" email footers to cover attachments.
  • If you do not want to be bound until the contact is signed, then say so expressly in your communications (both written and verbal). In England, the phrase "subject to contract" is often used. In Scotland, while it may help to use this phrase, it does not have the legal meaning that it has in England. It is better to spell out the position in each communication e.g. by making clear that nothing in the communication constitutes a legal offer that is open for acceptance to create a legally binding contract.

Case: Baillie Estates Limited v Du Pont (UK) Limited