Things move fast in Internet time. Even contract formation and modification. As a recent court decision in an Internet advertising case shows, a few keystrokes of instant messaging can have million-dollar consequences.
Smoking Everywhere Inc. sells electronic cigarettes. It contracted with CX Digital Media Inc., in August 2009, for Internet advertising, agreeing to pay $45 for each completed sale it obtained through CX Digital’s Internet ads, up to 200 sales per day.
A month later, Smoking Everywhere’s vice president for advertising had an instant message conversation, occurring during the course of a full workday, with an account manager at CX Digital. Toward the end of the day, after discussions of testing of new ads and new URLs, these messages were passed back and forth, within a stream of IMs over a two-hour period:
Account manager: We can do 2000 orders/day by Friday if I have your blessing.
Advertising VP: NO LIMIT.
Account manager: awesome!
In response, CX Digital stopped using the 200 sales/day limit, and began making an average of 1,200 referrals per day. When CX Digital billed Smoking Everywhere for the higher volume, however, Smoking Everywhere refused to pay.
Ruling on the dispute, a federal court in Florida held on March 23 that the IM exchange demonstrated the clear intent to remove the prior daily referral limits, and thereby modified the contract. The monetary consequences of this two-word contract change? $1,235,655.
In today’s electronic world, a few pixels can create a deal—and make a big difference.
Posted by Mark Sableman
msableman@thompsoncoburn.com
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