Introduction
This document firstly provides some general information about the Electronic Transactions Act 2002 (ETA), the scope of its application and its general intent.
Secondly, it provides a plain language explanation of each section of the ETA in order.
The ETA provides for a certain number of specified transactions to be excluded. These are listed in the Schedule.
The Genesis of the ETA
The process of formulating the ETA has included two Law Commission reports, published in 1998 and 1999, a Ministry of Economic Development discussion paper published in May 2000 and the select committee process.
At each stage of the policy development process there has been opportunity for input from the public and many submissions were received from a wide range of interested parties including: the New Zealand Law Society; the Institute of Chartered Accountants; major law firms; and a number of major New Zealand companies.
Following the recommendation of the Law Commission, the ETA is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce and the Model Law on Electronic Signatures. The Law Commission also recommended that the ETA closely follow the Australian Electronic Transactions Act 1999 in order to further the goal of co-ordination between the two legal regimes.
On substance the ETA adopts international norms and follows the UNCITRAL model closely. On a number of points of detail, consistency with the Australian law was pursued because, for companies subject to legal requirements under New Zealand legislation, the other legal regime that is most likely to apply (in relation to record keeping, provision of information etc) is the Australian regime.
Scope and Purpose of the ETA
The ETA does three things in order to facilitate the use of electronic technology:
- it confirms that electronic methods of communication are legally effective (Part 2);
- it sets default rules for the time and place of dispatch and receipt of electronic communications (whether or not the communications are used to meet a legal requirement) (Part 2); and
- it provides that certain paper-based legal requirements may be met by using electronic technology that is functionally equivalent to those legal requirements (Part 3).
The provisions in Part 2, particularly the default rules for time and place of dispatch and receipt, apply to all electronic communications.
Most of the provisions in the ETA are, however, in Part 3.
It is important to understand that the provisions in Part 3 only apply to legal requirements for writing, signatures etc, that is, requirements set down in statute or regulation ("statutory requirements"). For most communications, for instance those relating to contract formation, these provisions are irrelevant because they are not made pursuant to a legal requirement. Only the default rules in Sections 10 to 13 apply to communications of this kind. (That is why, from a co-ordination perspective, it is overlapping statutory requirements that are significant, rather than volumes of transactional activity alone.)
It must also be borne in mind that there are a number of things that the ETA does not attempt to do. It does not seek to create certainty in the electronic context that does not exist in the hardcopy context. For instance, the ETA does not deal with attribution in regard to signatures; this will be dealt with under the common law, as is the case with hardcopy signatures.
General Comments on the Default Rules for the Time and Place of Dispatch and Receipt of Electronic Communications
These rules apply to all electronic communications. There are two points to be made about them:
- The rules are default rules, and do not apply if the parties agree otherwise.
- The rules are the same rules as found in the Model Law on Electronic Commerce and have been implemented in a number of jurisdictions, including Australia. They are designed to be an international standard that can be implemented in a wide range of jurisdictions. As such they utilise more generalised language that is less specific than ideal. The benefit, though, is that New Zealand business will be subject to the same rules as apply in the jurisdictions of many of our trading partners, hence making it easier to transact electronically across borders.
Consumer Protection
The rights of consumers are protected in several ways in the ETA.
Firstly, it is crucial to remember that, apart from the default rules on time and place of dispatch and receipt, the ETA only applies to statutory requirements. Transactions that are governed by common law rather than statute, such as the formation of contracts, will not be changed by the ETA.
Secondly, no person, solely by virtue of the ETA, will be required to use, provide, or accept information in electronic form without that person's consent.
Thirdly, selected legal requirements to communicate with consumers are excluded from the application of the ETA, e.g. parts of the Credit Repossession Act 1997 and the Door to Door Sales Act 1967. Those not excluded may be subject to regulations requiring that additional conditions be met before transactions may occur electronically, such as express consent in respect to certain provisions of the Credit Contracts Act 1999.
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