grain contracts

Traditional communication methods are a thing of the past. With instant access to email, social media, text messages, websites, and video calls, digital communication is now the primary way individuals and organizations connect. In this digital age, emojis have become a key form of expression. Traditional contracts, once reliant on handwritten signatures, have now expanded to include electronic signatures under federal and state law. But can a simple thumbs-up emoji or smiley face be seen as legally binding consent in a contractual agreement? Recent legal trends suggest that in certain circumstances, the answer may be yes. Producers should be aware of the potential legal risks emojis pose when negotiating a contract through digital communications.
Legal Landscape of Electronic Signatures
- Federal E-Sign Act: The Electronic Signatures in Global and National Commerce Act (“E-Sign Act”), enacted in 2000, ensures that electronic records and signatures are legally valid, provided they meet certain requirements. The law explicitly states that electronic contracts and signatures cannot be denied enforceability solely because they are digital. Under the E-Sign Act, an electronic signature is broadly defined as any “electronic sound, symbol, or process” associated with a contract and executed with intent.
- Ohio’s UETA: Ohio has adopted the Uniform Electronic Transactions Act (“UETA”), which complements the E-Sign Act and provides additional guidance on electronic contracts within the state. UETA establishes that electronic signatures and records hold the same legal validity as their paper counterparts (with limited exceptions), as long as both parties have agreed to conduct transactions electronically. Like the E-Sign Act, UETA does not explicitly address emojis. However, given its broad definition of electronic signatures, emojis could qualify if used with the intent to agree to contract terms.
- Industry Standards: Additionally, certain industries may have standards that deal with digital communications. For example, within the grain trade, a responsive emoji texted to a purchaser might be deemed sufficient “confirmation” under the National Grain and Feed Association’s (“NGFA”) Grain Trade Rules. These rules require written confirmation, which can be sent via postal mail, courier, or electronic means. Since the rules do not expressly exclude emojis as a form of electronic communication, their validity remains an open question.
Judicial Treatment of Emojis and Digital Communications in Contract Law
While Ohio courts have yet to issue a definitive ruling on emojis as contractual acceptance, there is case law that addresses the issue of digital communications and the use of emojis to create a legally enforceable contract.
- International Case Law: Although not a binding legal precedent, a notable case outside the U.S. has gained international attention. In South West Terminal Ltd. v. Achter Land & Cattle Ltd., the court addressed whether a farmer’s thumbs-up emoji in response to a contract image constituted acceptance. The court ruled that a legally binding contract was formed and held the farmer liable for breach. (See our original post on the South West case here). In December, a Canadian appellate court upheld this decision, finding that Achter Land & Cattle intended to enter into a contract with South West Terminal and that both parties had communicated and agreed upon the essential terms.
- U.S. Case Law: While no U.S. case law directly addresses whether a contract can be formed by the use of emojis as the court does in the South West case, there are examples of U.S. courts interpreting digital communications and the use of emojis within other traditional legal frameworks.
- CX Digital Media, Inc. v. Smoking Everywhere, Inc.: The court held that an instant message exchange effectively modified a contract that contained a “no-oral modification clause.”
- In RE Bed Bath & Beyond Corporation Securities Litigation: The court ruled that a “full moon face” emoji contained within a tweet could plausibly mislead stockholders and could be a securities violation in some contexts.
- Lightstone Re LLC v. Zinntex LLC: The court determined that a factual dispute remained as to whether a thumbs-up emoji constituted a valid contract, preventing it from granting summary judgment on that basis (though summary judgment was granted for the plaintiff on other grounds). The court acknowledged that “even if such an electronic signature in the form of an emoji can create a valid contract, there still must be a meeting of the minds and an intent to be so bound.”
- Battle Axe Construction, LLC v. Hafner & Sons, Inc.: An Ohio court ruled that a series of emails met the requirements of Ohio’s Statute of Frauds, which requires certain contracts to be in writing.
- N. Side Bank & Trust Co. v. Trinity Aviation, L.L.C.: An Ohio court determined that a series of emails between the parties included the necessary elements to form a legally enforceable contract.
What does this all mean?
In summary, there is no clear answer (either in Ohio or nationwide) on whether an emoji can serve as an electronic signature and signify acceptance of a contract. However, as can be seen from the list of cases above, there is legal precedent establishing that digital communications can create a legally enforceable contract.
If the issue of whether an emoji qualifies as an electronic signature arises, Ohio courts will likely consider the broad definition of electronic signatures under federal and state law. They will also evaluate the context of the digital communication between the parties, assessing whether all elements of contract formation are present and whether a party intended to accept the contract by sending an emoji.
How should you manage your digital communications?
Although digital communications and contracting are legally recognized, using emojis as evidence of contract formation remains challenging. Emojis can be ambiguous and open to interpretation. For instance, the fire emoji might signal excitement in one context but destruction in another. One party may interpret it as confirmation of a contract, while the other may intend it as a rejection of negotiations. This type of ambiguity will continue to pose an ongoing issue if emojis are allowed to be used as electronic signatures.
To help minimize the risk of misinterpretation when negotiating contracts digitally, consider these best practices:
- Avoid emojis – While it may seem simple, refraining from using emojis helps prevent confusion over contract formation and reduces the risk of an emoji being interpreted as an electronic signature, lowering the chances of disputes or litigation.
- Clarify intent if emojis are used – If the other party includes emojis in negotiations, follow up to ensure their intent is clear and unambiguous. Additionally, consider finalizing digital negotiations with a formal written contract.
- Establish employer guidelines – Employers should implement internal policies outlining how employees engage in contractual discussions via text, email, or social media to ensure clarity and consistency.
Final Thoughts
As digital communication evolves, so too will legal interpretations regarding its use. The federal E-Sign Act and Ohio’s UETA provide a robust framework for recognizing electronic agreements, and courts may uphold emojis as valid expressions of contractual intent under the right circumstances. Nevertheless, the safest approach remains to use traditional contractual language alongside any digital expressions. When in doubt, always put it in writing—words continue to reign supreme in contract law.
Tags: contracts, electronic signature, digital communications, digital contracting, grain contracts, contract law, contract formation
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Thanks go to my colleague Robert Moore for submitting our first guest blog and sharing the following expertise on the issue of vomitoxin detection in corn.
by Robert Moore, Attorney, Wright Law Company, LPA
Ohio and other areas of the Corn Belt have seen unusually high levels of vomitoxin in corn. Vomitoxin is a mycotoxin that can cause livestock to reduce feed intake and reduce weight gain. Some elevators and ethanol plants have been rejecting corn that has tested too high for vomitoxin. What legal standing do producers with rejected corn have?
Producers with a Contract
Producers who have a contract with a buyer must look to the contract to determine their rights. All provisions, including any small print on the back of the contract, must be read entirely before assessing legal rights. The language of the contract is what matters; any verbal agreements made outside the contract have very little effect in enforcing legal rights. Even if the producer and buyer agree to certain terms, if the terms do not find their way onto the contract then the parties are probably not bound by the terms.
In regards to Vomitoxin, the key terms are those describing the quality of the corn required to be delivered. Grain contracts will include at least the bare minimum “No.2 Yellow Corn” requirement. No. 2 Yellow corn is a grade established by the USDA and may have up to 5% damaged kernels. The USDA defines damaged kernels as “kernels and pieces of corn kernels that are badly ground-damaged, badly weather-damaged, diseased, frost-damaged, germ-damaged, heat-damaged, insectbored, mold-damaged, sprout-damaged, or otherwise materially damaged.” Therefore, if the only grade standard in the contract is No. 2 Yellow Corn, a producer’s corn should not be rejected or discounted solely for Vomitoxin unless more than 5% of the kernels are diseased. However, corn could likely be rejected if 3% of the kernels were diseased with Vomitoxin and another 3% were damaged in another manner. The 5% threshold is the accumulation of all damaged kernels and not just a single type of damage.
Some contracts will include more restrictive grade terms such as “must be suitable to be fed to livestock” or “must meet all FDA guidelines”. The FDA has established a 5 part per million (ppm) threshold for hogs and 10 ppm threshold for cattle and poultry. Therefore, an elevator that requires corn to meet FDA standards or to be safe for livestock consumption can reject corn if it has more than 5 ppm vomitoxin. It is important to note that corn could have less than 5% damaged kernels but have more than 5 ppm vomitoxin. That is, the USDA No.2 Yellow Corn grade is a completely different standard that the FDA’s ppm standard. Ethanol plants must be extra concerned with vomitoxin becoming concentrated in the distillers grain by-product and may have even more restrictive terms than FDA.
Producers that have corn rejected can have the dual problem of having corn rejected and still being obligated to fulfill the contract. A worse case scenario would see a producer not being able to sell his corn due to high vomitoxin levels while still being required to fulfill his contract obligations for untainted corn with the elevator. Local reports indicate that elevators have been letting producers out of their contracts if their corn has been rejected for vomitoxin but this could change at any time.
Producers without Contracts
A producer who intends to sell a load of corn to the elevator without a contract has very little legal protection from the corn being rejected. The elevator is under no obligation to buy the corn and can simply opt not to buy the corn for any reasonable reason. Without a contract, the elevator is not bound to any predetermined grade standards. Even the smallest amount of vomitoxin in the corn could cause it to be rejected.
Disputed Grain Samples
Producers have the right to appeal the grain grading determination performed by the elevator. The Federal Grain Inspection Service (FGIS) oversees grain grading procedures and methods and also provides inspection and appeal services. A producer who disputes the elevator’s grading can send a sample to FGIS and FGIS’ determination will be binding on both parties. A FGIS office is located in Toledo. For more details and information on grading appeals, contact FGIS at 419- 893-3076.
Crop Insurance
Some crop insurance policies cover Vomitoxin damage. It is best to have the corn checked by an adjuster while still in the field to avoid tainted corn from being mixed with untainted corn in bins. Many producers have opted to not file a claim due to the significant impact on APH. They would rather maintain a higher APH than to file a marginal crop insurance claim. The deadline for any claims on vomitoxin was December 25, 2009. In the future, a producer’s crop insurance agent should be contacted at the first sign of Vomitoxin to ensure that all claim procedures are property followed.
Future Implications
Will we see grain contracts move away from the USDA No.2 Yellow Corn standard and towards the FDA ppm standard for vomitoxin and other mycotoxins? Elevators relying on the USDA standard could get stuck buying corn that exceeds the FDA’s ppm standards. Unless blended with non-tainted grain, this grain would seemingly be unmarketable as it could not be used for human consumption, livestock consumption, and/or export. Producers should anticipate possible changes to grading standards in contracts offered by elevators and other buyers. A careful reading of all new grain contracts should be a must for producers to make sure they fully understand the quality and grade of grain they are expected to deliver to the buyer.
Robert Moore is an attorney with Wright Law Co. LPA in Dublin, Ohio, www.wright-law.net. E-mail: rmoore@wright-law.net
Tags: grain contracts, grain grading disputes, grain rejections, vomitoxin
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