The Tips and Traps of Email Communication in Business

As a business lawyer, I've seen first hand how email communication in a business setting can be both a blessing and a problem for businesses.


This article explores the pros and cons of relying on email communication in a business setting.


Author: Farrah Motley, Solicitor of the Supreme Court of Queensland, Australia


Legal Issues and Business Emails

Business Emails: The Positive Stuff


Business Emails Act Like Contemporaneous Notes


When it comes to evidence, the more contemporaneous the evidence, the more persuasive that it is. This is because, usually, when correspondence or notes are created close to a relevant event, they are rarely created with the benefit of foresight of the issue that might eventuate.


For example, if you send an email to your business counterpart confirming a recent conversation, if that conversation later becomes critical in a dispute with your business counterpart, you have an email record at around the time the conversation occurred, which might shed light on what was said and support your version of events.


Business Emails Are Traceable


Microsoft Outlook and other email platforms keep email logs. How long those logs are retained for depends on your business' retention policy. You can learn more about Microsoft Outlook retention logs here.


The point about these logs, from a legal perspective, is that there can be disputes about whether notices given under a contract were in fact sent, or received, or whether they were intercepted. Business email logs show a significant amount of data regarding the email itself, and can shed light on its journey from Point A to Point B.


Business Emails Are Instantaneous


Communication by post can create a period of uncertainty while the recipient waits to receive the communication. On the other hand (for the most part), emails enable instantaneous communication and eliminate the period of uncertainty.


The postal acceptance rule (yep - you guessed it!) only applies to communication sent by post, not email. So those 'other' legal issues don't crop up.


Business Emails: The Bad Stuff


Business Emails Act Like Contemporaneous Notes


No, you're eyes didn't deceive you! While the contemporaneous nature of business emails can be a positive, it can also be a negative and a double-edged sword if the communication does not support your version of events. Where an email does not support your recollection of events, this can be for a number of reasons, including the impact the lapse of time has on memory recall (you can read more about that here) or it may be that the email didn't actually record the version of events accurately.


Where an email does not support your version of events and you allege that the email didn't record the version of events accurately, this can be problematic. Where there are two competing versions of events (he said / she said), that version which is supported by contemporaneous evidence, including an email, is going to be preferred over the version that is not supported by anything other than an (sometimes) unreliable memory.


Business Emails Can Be Binding


Business emails offer a seemingly informal means of communicating. Perhaps this is one of the reasons why business emails can create so many legal issues in the context of communication by an employee that unintentionally binds their employer company, in circumstances where that employee did not have the authority to bind.


As recent as 2015, the Supreme Court of Queensland confirmed that email communications can amount to a legal contract, in this case, a contract for the sale of a commercial property known as the Koah Roadhouse.


The case, Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119, involved a service station in Far North Queensland owned by North Queensland Fuel (NQF). NQF appointed Colliers International (Cairns) Pty Ltd to sell the freehold and the business.

Representatives of United Fuel Pty Ltd (United) inspected the property, and then began negotiations for its purchase by exchanging a series of emails and telephone communications.


Needless to say, a disagreement arose between the parties. NQF attempted to 'withdraw' from the agreement and had sold the Koah Roadhouse to an alternative buyer. On the other hand, United (the buyer) argued that there was a binding contract on the basis of the email exchanges (as well as some of the phone calls).


The Court considered the effect of the words “subject to contract” and whether the offer and acceptance were unconditional. Citing McHugh JA in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd, the court commented:

“Even when a document recording the terms of the parties’ agreement specifically refers to the execution of a formal contract, the parties may be immediately bound. Upon the proper construction of the document, it may sufficiently appear that the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms: Sinclair, Scott & Co Ltd v Naughton

The court found that the context of the emails and the expressions used in them, strongly suggested that the parties were content to be bound, whilst expecting to make a subsequent formal contract in substitution for the first contract, with additional terms contained by consent.


The Court found that the words used by United were sufficient to effect the acceptance, in particular from the closing words of the email: “I look forward to receiving your client’s confirmation that our offer is accepted as clearly both parties are now going to start incurring significant expenses”.


Ultimately, the court found that the emails created a legally binding contract.


Business Emails Can Be Comprised


Unfortunately, many businesses have been the victims of business email compromise.


Issues can arise (both legal and reputational) when a business' email system is compromised and both the business and the customer suffer loss as a result.


You can read more about business email compromise here.


Author: Farrah Motley | Legal Principal

PROSPER LAW - A Law Firm for Businesses

M: 0422 721 121

E: farrah@prosperlaw.com.au

W: www.prosperlaw.com.au



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