09 February 2011


The Government has introduced the Electronic Transactions Amendment Bill 2011 (Cth) into the House of Representatives.

It is envisaged that the statute will update the Electronic Transactions Act 1999 (Cth) to "reflect internationally recognised standards on electronic commerce and bring Australia's electronic transactions legislation into the 21st century".

The Bill is based on a Model Electronic Transactions Amendment Bill developed by the Standing Committee of Attorneys-General last year.

In introducing the Bill the Attorney-General, Mr McClelland, commented that -
These reforms will provide increased legal certainty in trade by electronic means, and will encourage the continual growth of electronic contracting both domestically and internationally.

The amendments will align Australia's uniform Electronic Transactions Acts with the United Nations Convention on the Use of Electronic Communications in International Contracts 2005.
The Electronic Transactions Act 1999 (Cth) implemented the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce 1996 (aka the Model Law). The UNCITRAL Model Law provides internationally accepted rules to remove legal obstacles and provide a more secure environment for electronic commerce. The Australian States and Territories passed Electronic Transactions Acts consistent with the Commonwealth Act to achieve national uniformity.

The 1999 Act - often dubbed the ETA - implements three key aspects of the UNCITRAL Model Law: the legal validity of electronic transactions, non-discriminatory treatment of different electronic methods, and party autonomy to agree to alternative terms and conditions.

In essence, the Act aims to remove impediments to use of electronic communications in transactions with government, business or consumers. It provides that transactions taking place under a law of the jurisdiction will not be invalid simply because they are completed electronically. It allows business and government to meet in electronic form requirements such as providing a handwritten signature, giving information in writing, producing a document in material form, and recording or retaining information.(The Electronic Transactions Regulations 2000 exclude certain documents and transactions from the application of the Act.)

The new Bill was developed after consideration of the proposal to accede to the United Nations Convention on the Use of Electronic Communications in International Contracts 2005. That Convention was adopted by the UN General Assembly in November 2005, building on the Model Law by "offering practical solutions for issues arising out of the use of electronic communications in the formation or performance of contracts between parties located in different countries". The Convention fills in gaps identified since the Model Law was developed ("a greater knowledge of the internet and the use of electronic communications"), enhancing certainty rather than superseding national contract law. The Convention does not require significant changes to Australia's electronic transactions regime.

The Convention provides default rules for determining the time of dispatch and receipt of an electronic communication in connection with formation and performance of a contract. The Bill applies those default rules in determining the time of dispatch and receipt in relation to all electronic communications, including recognition of automated message systems, clarification of an invitation to treat, rules to determine the location of the parties, updating electronic signature provisions and default rules for time and place of dispatch and receipt. The amendments do not represent major changes to settled contract law. The Bill reflects statutory protection in Australia for consumers through for example the Competition and Consumer Act 2010 (Cth), going beyond the weaker protection in the Convention regarding personal, family and household contracts.

The Model Law and Convention feature a formula to determine the time of dispatch of an electronic communication which involves the notion of a communication leaving the control of the originator’s information system. The Model Law is directed at the time an electronic communication enters the information system of an addressee. In contrast,the Convention is directed at the time the communication leaves the information system of the originator. In practice there will often be little difference but network instability and spamming means that email may be lost or delayed by security measures such as filters.

The Bill seeks to amend the ETA, adopting the Convention rule that dispatch occurs at the time an electronic communication leaves the information system of the originator (broadly consistent with the traditional 'postal acceptance rule' under common law, with acceptance of a contract offer effective immediately after a properly pre-paid and addressed letter is posted rather than when it is received). It provides that where an electronic communication does not leave the information system of the originator, the time of dispatch is deemed to be when the communication is received by the addressee. (That provision anticipates exchange of electronic communications within the same information system.) It does not distinguish between an information system that is, or is not, under the control of the user such as where the parties are using web-mail or Software as a Service (SAAS) models. The proposed changes to the ETA confirm that the default rules for determining the time of dispatch are not affected if the information system supporting an electronic address is in a different location from where the electronic communication is sent, which could be in a different location or jurisdiction.