A Contract By Email

The following recent case illustrates that it is crucial to take care when dealing “electronically”… If it’s in writing – whether signed by hand or via an email exchange on one’s iPhone or Blackberry – it is permanent… and potentially binding on the parties.

In Nicholas Prestige Homes v Neal [2010] EWCA Civ 1552, the Court of Appeal upheld a claim for damages by an estate agency (NPH) after a property seller (N) entered into a sole estate agency agreement with NPH by e-mail, but subsequently sold the property through a third party agent (P). The property seller argued in the first instance that there was no contract, but the court held that a contract existed and that it had been breached by continuing to instruct P.

The appeal judge upheld the finding of the first instance judge that there was a contract made by the e-mail exchange between NPH & N and proceeded on the basis that there was a sole agency agreement between N and NPH and during this period; NPH ought to have been the only party marketing the property. However, as P remained instructed during the “exclusivity period” and dealt with the eventual purchaser, despite there being a term stating that P would be dis-instructed,  there was a breach of the terms of the sole agency agreement.

The judge awarded NPH damages for loss of chance; NPH lost the chance of earning the commission, as the same sale would surely have been concluded through NPH. No arguments were raised about the fairness of NPH’s contract terms.

The case demonstrates that buyers must take care when dealing with suppliers of goods and services by e-mail in order to avoid making expensive mistakes and also raises the issue of thoroughness, or lack thereof, on the part of NPH, who were forced to take expensive court action which could have been avoided had they sent a confirmation form with the e-mail or alternatively, required N to expressly show that she had accepted the terms of the contract with NPH.