20 January 2020 - Post by:Jason Rix
In Athena v Superdrug, the court held that a two-email exchange—culminating with “Please go ahead with the below…”—amounted to a binding contract.
In the exchange, Athena asked Superdrug to confirm that a stated minimum number of orders was being placed. Superdrug responded saying “Please go ahead with the below…”
Superdrug, argued there was no contract because:
- the email chain did not amount to a contractual agreement as the Superdrug employee in question had not followed the usual Superdrug purchasing procedure (issuing a specific purchase order) when contracting with Athena;
- there was no intention to create legal relations; and
- the Superdrug employee lacked ostensible authority to enter into a contractual agreement for the purchase of goods.
The court agreed with Athena, granting summary judgment on the basis Superdrug’s arguments did not have a real prospect of success.
Specifically, the court decided that the Superdrug employee held themselves out as a buyer authorised to negotiate terms and that Athena lacked any knowledge of restrictions existing on the buyer’s authority to negotiate. Objectively there was no doubt that Athena, in the course of the email exchange, had relied on the Superdrug employee’s confirmation as binding legal intent to form a commercial contract. The court also noted that there was no evidence to show that Athena has acted unreasonably in thinking so.
Large corporations would do well to ensure that employees are sufficiently trained to avoid inadvertently entering commercial contracts (and potentially acting outside purchasing procedures) through the exchange of relatively informal emails. Clear communication, robust training and systems and controls should help reduce the chances of employees with ostensible authority falling into this trap.