Text messaging is part of everyday life. But can a simple SMS create a legally binding contract in Australia? The short answer is yes, it can provided that key legal elements are present.
Whether you’re a business owner negotiating a sale or an individual agreeing to services, it’s crucial to understand when digital communications like text messages may form a contract.
In this article, our contract law team explains how Australian contract law applies to SMS and other informal messages, how courts evaluate them, and how to protect yourself from unintended legal obligations.
Key Takeaways
SMS messages can form a legally binding contract if all required legal elements are met.
The key elements include: offer, acceptance, consideration, intention to create legal relations, and certainty.
Courts look at the content, context, and conduct of both parties.
Text messages are admissible as evidence in contract disputes.
For significant transactions, written contracts are always safer.
Legal Requirements for a Contract in Australia
For a text message to form a contract, five essential elements must be present:
Offer: One party makes a proposal.
Acceptance: The other party agrees to the terms.
Intention: Both parties intend to enter a legally binding agreement.
Consideration: Something of value (e.g. money, service) is exchanged.
Certainty: The agreement is clear and specific enough to be enforced.
If all these are present in a text exchange, a contract may be legally enforceable (even if no formal written document exists).
Are Text Messages Legally Recognised as Contracts?
Yes. The Electronic Transactions Act 1999 (Cth) and state-based laws support the use of electronic communications to form contracts, provided both parties consent to this method.
Electronic records and signatures are legally valid.
Consent can be implied by repeated use or ongoing digital communication.
This means contracts negotiated and agreed via SMS, WhatsApp, Facebook Messenger, emails, and other platforms may be enforceable under Australian law.
Unsure when a handshake or email becomes legally enforceable? Learn more about when an agreement becomes legally binding.
How Courts Assess SMS Agreements
Australian courts consider multiple factors when assessing if a text message forms a contract:
Does the language show clear agreement?
Do the messages include all key terms?
Is there an obvious offer and acceptance?
What was the intention of the parties?
Was there any follow-up action consistent with a binding agreement?
In, Stellard Pty Ltd v North Queensland Fuel Pty Ltd, the Queensland Supreme Court held that email exchanges constituted a binding agreement. The same legal reasoning applies to text messages and similar communications.
Limitations and Risks of SMS Contracts
While text messages can form contracts, they are not always ideal, especially for important deals.
Risks include:
Ambiguity: Informal messages can lack clarity or completeness.
Disputes: Messages may not clearly reflect intent or obligations.
Lack of formality: Some agreements (e.g. real estate sales) legally require signed documents.
Proof of identity: You may need to prove who actually sent the message.
Example: Text Message Contract in Action
A small business owner offers to sell a printer via SMS:
“I’ll sell you the printer for $500.”
The buyer replies:
“Agreed, $500 for the printer. When can I collect?”
They discuss payment and pickup times. The buyer later refuses to pay. In court, the SMS thread is accepted as evidence, and the judge finds that a legally binding contract was formed – with clear offer, acceptance, and intention.
Frequently Asked Questions
Can a text message be used as evidence of a contract in Australia?
Yes, text messages are admissible as evidence if they demonstrate an agreement meeting the legal requirements for a contract.
What if I did not intend my message to be legally binding?
Intention is crucial. Courts will consider the language used and the context. If it is not clear you intended to create legal relations, a contract may not be found.
Are there contracts that cannot be made via text message?
Certain contracts, such as for the sale of land or guarantees, must be in writing and signed under legislation like the Conveyancing Act 1919 (NSW). Text messages may not satisfy these requirements unless specific criteria are met.
What should I do if I want to avoid forming a contract by text?
Use clear language such as “subject to contract” or “not legally binding” and avoid agreeing to all key terms in writing until you are ready.
If the contract is already formed, know your rights when ending a contract, and read our guide on how to terminate a contract.
Can businesses rely on text messages for important agreements?
While text messages can form contracts, formal written agreements are safer for significant transactions to avoid ambiguity and disputes.
