If you are sending text messages about purchasing a property, take care what you type.

In a recent NSW Supreme Court case, a Ms Tout* tried to argue that a text message from the property owner amounted to a binding contract.  The seller had promised to sell their property to Ms Tout, but instead sold to another buyer.  Ms Tout tried to enforce the text message as an agreement.
Ms Tout’s claim was unsuccessful.  In dismissing the claim, the Supreme Court focussed on the failure to meet the requirement under the NSW Conveyancing Act that a contract must be signed.  The seller had not signed their text message.
The fact that the message was electronic was not a problem.  The law in NSW allows for an electronic contract.  So, a text message may in principle amount to a contract.
The law allows for an electronic signature and there is case law that merely typing your name amounts to a signature.  It is therefore possible that an exchange of texts might amount to a binding contact.  However, on this occasion, the seller did not sign off on their text.
The lessons learned:

  • If you are negotiating a purchase or sale but are not yet ready to commit, make sure your electronic communications do not amount to a contract.  This applies to text messages and emails.
  • If you want to create a binding contract electronically, make sure to follow the right steps to meet the necessary conditions for a contract.

Pacific Law can help to ensure that your communications are as binding or non-binding as you want them to be.