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Sign of the times: beware of the pitfalls of electronic negotiations

There is no doubt that modern technology has transformed the lives of those of us who spend our time considering, producing and amending large quantities of documentation.

First came the photocopier, and legal secretaries were relieved of the task of painstakingly copy typing all documents required for trial.

Almost immediately trial bundles mushroomed in size - from one modest lever arch file to tens and now, frequently, scores of files. The corridor to my room is all but blocked by stacks of boxes containing documentation for a colleague's forthcoming trial. He is bemoaning the fact that the start has been delayed because the judge has ordered that the trial bundle be reduced to a mere 150 files.

Then came the fax machine. The prominent silk in chambers who confidently predicted that there was no point acquiring a fax machine because it would not catch on, was proved wrong. Overnight the Temple was cleared of noisy motorcycle couriers rushing urgent papers to chambers. Instead, a whole brief could chug its way out of the fax machine in the time it took you to grab your wig and gown.

By this time the word processor was becoming more commonplace. While firms of solicitors invested large sums of money in cumbersome hardware and distinctly userunfriendly software, most of which was out of date six months later, barristers' chambers continued to employ the chambers typist locked away in what would have been a broom cupboard but for the kettle and small skylight open to let out the cigarette smoke. Junior barristers invested in an Amstrad and avoided the typing bill.

But the real transformation occurred with email. There is no doubt that email is a marvellous thing. Documents transmitted electronically can be amended in a colour of your choice and sent back in the blink of an eye. Voluminous documentation takes up no more space than does a paperclip. One can communicate with one's fellow professional in a prompt and informal way. One can even respond to pictures of the family's kittens. The fact that these forms of communications are sometimes muddled up and the Chartered Institute of Arbitrator's brainstorming think-tank was treated to 'Pixie and Pansy: aren't they sweet!' is just part of the modern day experience.

Increasingly, 21st century commerce relies exclusively upon email. But how does it fit in with legal requirements? If you cannot be sure that your email was received by the intended recipient, the cyberspace version of the post box rule may come into play (see AJ 18.7.02) but even when received, can an exchange of emails amount to a contract? This point was considered in the High Court case of Pretty Pictures v Quixote Films (judgment 30.1.03). The claimant company, the alter ego of James Velaise, a French film distributor, was interested in acquiring distribution rights in the defendant's film Lost in La Mancha. Although Velaise met the defendant's agent at the Berlin Film Festival, negotiations took place almost entirely by email.

The judge was provided with hard copies of these electronic exchanges and considered them as documents. He observed that, 'somewhat confusingly', one party's comments or queries on the other's terms had been inserted into the original email.

Where, for example, the defendant had rejected the proposed term of 12 years, the claimant had inserted the query 'what do you suggest?' The negotiations concluded with an email from the defendant: 'The deal is approved. You will be receiving the contract by email before tomorrow.' In fact the defendant did not proceed with Mr Velaise. Had it welshed on a concluded contract?

The judge recognised that various matters remained to be agreed, primarily the release date for the film. But the clincher, in his view, was that the parties did not expect the contract to become binding until some form of written contract had been signed. It seems, therefore, that the ether is fine for negotiations, but in some cases, a good old-fashioned signature is required.

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