Email exchange amounted to contract, court rules

The case rested on whether a deal involving a reseller selling Opus One to a Team Progress client was a contract created by a series of emails

Tempus Fugit, maker of the Opus One payroll application, has lost an appeal to the High Court regarding whether an exchange of emails with a reseller, Team Progress, amounted to a contract.

In a judgment delivered in May, Justice Venning ruled that Tempus Fugit must pay Team Progress $39,372 to fulfil the terms of the contract created by the emails.

Tempus was appealing an earlier district court decision in Team Progress’ favour.

The case rested on whether a deal involving Team Progress selling Opus One to a Team Progress client, Plumbing World, was a contract created by a series of emails that referred to a previous joint Tempus Fugit-Team Progress sale to GL Bowron.

In an email on April 22, 2004, Team Progress’ then business development manager, Jason Black, emailed Tempus Fugit’s managing director, John Mann, stating “Management here would like me to clarify the terms between [the two parties]. Is this the same as GL Bowron, ie 50% of the software and all implementation to [Tempus Fugit]? Or do you have something different in mind.”

Mann replied the same day, saying, “Same as the last one is fine but do not discount or give anything away for free, already giving them reduced implementation rates.”

After Plumbing World agreed to buy Opus One, Mann emailed Black, saying, “I do not want invoicing to go through [Team Progress]; we will invoice and pay [Team Progress] their commission. We want control this time, not [Team Progress].”

Team Progress then signalled its acceptance of this — and a 50/50 split in revenue, as per the GL Bowron deal — in another email.

Tempus Fugit’s Mann replied, “Further to discussions, we will invoice and deal with the client directly.

“We agree to pay the 50% on licence, only in two parts, once paid we will remit 50% of the 50% on invoice and the balance will be three months after the final licence payment by the client — Plumbing World on invoice from [Team Progress].”

After Plumbing World paid the full amount to Tempus Fugit, the latter withheld the disputed amount from Team Progress, leading to Team Progress taking legal action.

Venning upheld the result of that action, stating, “The appeal must be dismissed. The District Court Judge was right to find a contract between the appellant and respondent.”

Tempus Fugit submitted in its appeal that it and Team Progress had not reached agreement on every term which was legally essential to the formation of their bargain, and cited a precedent to support that claim, but Venning ruled in Team Progress’ favour.

He noted that while Tempus Fugit’s Mann “does not consider [Team Progress] did sufficient to justify payment of 50% of the licence fee ... the appellant’s bad bargain, if indeed it was a bad bargain, is not however a basis for a defence to the respondent’s summary judgment application.”

Tempus Fugit’s appeal “is based on Mr Mann’s wishful interpretation of the agreement, rather than an objective interpretation of the agreement as evidenced by the contemporaneous email correspondence,” Justice Venning noted.

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