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Jan Prošek | June 18, 2024

M&A

An agreement to agree on the transfer of shares in a company entered into via WhatsApp and legal negotiations using chat (but also emoticons)

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Unlike a power of attorney, which must be granted in the same form as the legal act, for which the agent is to be entrusted, no such condition is required for an agreement to agree, as its form is not expressly limited by law. Although a part of the professional community implies the necessity of “following the form” for an agreement to agree as well, the current case law does not confirm this opinion. This feature of the agreement to agree was also evident in another case, where the parties went a step further.

The core of the dispute in question, which gave rise to the judgment of the High Court in Olomouc, Case No. 8 Cmo 251/2023, is  the possibility of making an agreement to agree using electronic communication, specifically via WhatsApp. The judgments of both the Court of First Instance and the Court of Appeal reveal interesting and highly relevant aspects for the assessment of legal actions taken in this form. The plaintiff sought a declaration as to the content of the share transfer agreement and payment of the amount of GBP 42,750 together with related payments. The action was dismissed in this case because there was no agreement between the parties on the mandatory essentials of the contract, inter alia, because it was not clear, for which entity Mr Jiří V. was acting, or whether he was acting for himself as a natural person or as an executive of the plaintiff (company). The courts have not ruled out the possibility of such a contract; on the contrary, by their detailed examination of all the circumstances of the situation, they have rather favoured this possibility.

In the case of electronic communication in the form of various messenger platforms, which contain records of all negotiations, Czech case law is not fully unified on the question of whether a written contract can be made using these (i.e. electronically), or whether the requirement of the written form of the legal act can be observed. Foreign case law goes further in addressing these issues. For example, in a situation where emoticons may give the impression of interest, this may be legally relevant not only for the assessment of entering into a contract, but also in terms of pre-contractual liability. A situation where a message containing an offer of goods, services or other subject matter of a contractual relationship is responded to with a “thumbs up” or thumbs up emoji can also be considered legally relevant conduct and at such a moment it cannot be ruled out that the Czech courts may assess the matter as a valid entering into a contract. This was the conclusion reached by a Canadian court in a dispute over entering into a contract for the supply of goods. The world courts, including the Czech ones, are thus faced with the difficult task of assessing emoticons and their meaning in the context of specific conversations, which may differ significantly not only in the context of individual countries and cultures, but also within specific social groups. To illustrate the situation, one can point to the reverse side of the matter, where Czech courts took into account the absence of emoticons as the seriousness of the communication made (i.e., that the communication was not made for fun). Therefore, in these cases, the courts will need to deal carefully with the significance of a particular emoticon or lack thereof for the content of the legal action and other circumstances.

Case law on legal actions taken through chat services or even in the form of an emoticon/smiley is developing and it is therefore necessary to be cautious even in the context of messages sent and reactions in chat, among other things, because while we are accustomed to take extra care when signing physical contracts, the environment of chat platforms has exactly the opposite effect. There the message may not be meant seriously and may not be intended to cause legal consequences, but that is exactly what can happen. The risk in making or assessing such a legal act may be the possibility of editing the messages sent (although such messages usually contain a standard indication of the fact that they have been edited), but also the identification of the person acting, since proving that the message in question was actually written by the person in question may not be a simple task.

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