Procurement · 17 October 2018

Is my office provider illegally withholding a deposit? Electronic contracts explained

To form a legally binding contract, there are 5 essential elements that must be present
As a Business Advice reader finds themselves in alegal dispute with their office provider over unpaid rent, Grid Law founder David Walker clarifies the elements of a legally binding electronic contract to lay out a potential resolution.

Question

HI David

I read an article you wrote about electronic contracts and wondered if you could offer me some advice.

My wife has a serviced office contract which ends at the end of this month after a 6-month period. We formally ended the contract by giving three months notice towards the end of June 2018 and the company accepted this on 28 June 2018.

We asked if we needed to confirm in writing as the notice was given via an online login portal. We told them that we would consider continuing to rent an office on a month-to-month basis at the end of the contract but we were still looking at options.

They responded saying:

yes, we have received your termination so you don’t need to give it in writing again. This will terminate end of October. We can do a monthly agreement for you moving forward, I can get this arranged and send over to you?

We did not actually ask or agree to a new period but on 28 June 2018, they sent a new contract to us.

The day after, on 29 June, we responded saying:

will not return the acceptance straight away, will do so closer to the time just in case our plans change?

They responded the same day saying:

that’s fine no problem. Have a great weekend?

We heard nothing further although we had been asking them if there were other offices available at other locations or in the same building on another floor. We were also looking at other offices provided by other companies.

They did send us details of an alternative office and we responded by saying we would not sign until closer to the time as we had not yet decided what we wanted to do.

On 28 September, completely out of the blue, we received an invoice for rent and a deposit for a new agreement commencing 1 November 2018. They said that we had accepted their agreement by clicking on an Accept? button in their email.

I have no recollection of doing this (but accept that it could have inadvertently happened as I was scrolling through the email).

When we initially entered into our original agreement with them, we had to type in the name and date the agreement. It clearly shows the name of the person who e-signed and the date.

We contend that clicking the accept? button is at odds with the email that we sent to them, we contend that we did not sign any such agreement and our communication with them the day after clearly shows that we were unaware of signing or agreeing to anything.

They contend otherwise. They are intending to hold the two months deposit that we gave under the existing contract to offset the deposit and rent for the disputed contract.

They told us that we would have to formally end the new contract if we don’t want it. We did so on their advice so even though we contend there is no agreement, they say we are liable for the rent for the month.

Any advice on this matter would be appreciated.

Answer

Thanks for your question.

The issue here is whether or not a new contract was formed for the second office.

To form a legally binding contract, there are 5 essential elements that must be present. These are:

  1. An offer;
  2. Acceptance of the offer;
  3. Consideration;
  4. An intention to be legally bound by the contract; and
  5. Sufficient certainty regarding the terms of the contract.
So, are all of these elements present to form a new contract?

It appears that the office provider did make an offer by providing you with the details of an available office. However, there is some doubt over whether or not you accepted that offer.

Clicking an accept? button under normal circumstance is certainly enough to accept an offer. After all, we do this all the time when shopping online. In your circumstances, I think the situation is different. You had clearly communicated to the office provider that you were not ready to enter into a new contract with them. However, they could argue that by clicking accept? you were now ready to enter into a new contract and this action overrides your previous email.

I believe you have strong grounds to counter their argument and prove you had not decided to enter into a new contract. This is because acceptance must be final and unqualified. If you had made a final and unqualified decision, why were you continuing to look for new offices (even with the office provider) It simply doesnt make sense.

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ABOUT THE EXPERT

David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry, advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.

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