Final Whistle! Contracts formed on social media enforced by the courts

A case heard in the English Court of Appeal has provided further clarity on when contracts negotiated over various communication channels become legally binding, enforceable contracts.

Background

DAZN Limited (“DAZN”) v Coupang Corp (“Coupang”) was heard in June of this year and focused on the broadcasting rights of the ‘FIFA Club World Cup’. The DAZN Group were authorised by FIFA to sublicence the competition’s broadcasting rights in different countries around the globe. Coupang are a South Korean e-commerce platform who also operate a streaming service and ‘bid’ for the rights to obtain the broadcasting rights for the tournament.

It was held in the Commercial Court, that a contract was formed between DAZN and Coupang through their emails and WhatsApp messages, where key terms were agreed and a draft contract was to follow. An injunction was granted in order to protect Coupang’s ability to enjoy its broadcasting rights.

DAZN appealed this decision, stating no contract was formed as there was never an intention to create legal relations at this stage of the negotiations. DAZN had in fact received a better offer from a third-party to broadcast the tournament and stated they had every right to refuse Coupang’s offer, as there was no legally binding or formal contract at this time.

The decision

In a previous article by Sophie Taylor, it was discussed that Whatsapp messages can form legally binding contracts as confirmed in the case of Jaevee Homes Ltd v Fincham. The essential elements of a contract; offer, acceptance, consideration and intention to create legal relations were all present during the discussions over WhatsApp and clearly demonstrates the importance of recognising how the digital age can leave a business legally bound to another.

Applying the standard principles to DAZN v Coupang, the Court held the following:

• There was a valid offer in an email sent by Cougang to DAZN. The parties had agreed (in principle) on the essential terms of the agreement which also included the price.
• It was confirmed in a further email a few days later that DAZN wanted to work with Coupang and other bidders would be “properly informed” (i.e. rejected from the process). This constituted an acceptance of the offer.
• There was valid consideration as Coupang were prepared to pay $1.7m USD for the broadcasting rights.
• Subsequent communications over WhatsApp and email had confirmed that representatives of both DAZN and Coupang believed they had reached a ‘binding concluded agreement’, thus satisfying the final step of creating a legally binding contract.

It was further held by the Court that there was nothing to suggest the parties intended for a formal draft of the contract to be a prerequisite to being legally bound by agreed terms. Ultimately, DAZN’s appeal was rejected and Coupang were free to enjoy the broadcasting rights they successfully bid for in the first place.

Conclusion

Social media has made it much easier to create legally binding agreements through instant messaging and phone calls. Businesses should always take careful consideration when negotiating or discussing potential new business opportunities.

A way in which DAZN could have avoided this issue, would have been through ensuring that all discussions were ‘subject to contract’. This simple phrase would qualify the discussions, so they were only legally binding when the contract was agreed and signed.

If you are considering entering into a new business venture or have questions regarding legal relations, please get in touch with Geldards Commercial Contracts team.