Electronic Transactions Act 2002 - Part 2: Improving Certainty in Relation to Electronic Information and Electronic Communications
Part 2 (Sections 8 to 13) contains provisions intended to reduce uncertainty in relation to the legal effect of information that is in electronic form, or that is communicated by electronic means, and to provide some default rules in relation to the time and place of dispatch and receipt of electronic communications.
Section 8 - Validity of Information
Before the ETA there was some uncertainty under New Zealand law about the legal effect of certain types of communication if they take place by electronic means, and about information which is recorded in electronic form. One important example was that some lawyers were advising their clients that there was a small risk that a contract formed by an exchange of emails might not be legally effective. This was almost certainly not the position; but the uncertainty was damaging. Section 8 is intended to remove the uncertainty surrounding the use of electronic methods.
Section 8(a) does not of itself enable electronic communications or electronic information to satisfy any substantive legal requirement, or any legal requirement in relation to form (e.g. that it be in writing, or signed). All Section 8(a) does is ensure that, if there is no other impediment to giving effect to a communication or other information, the fact that it was in electronic form will not of itself prevent it being given legal effect.
Section 8(b) addresses the related issue of incorporation by reference. Just as use of electronic means is not of itself enough to make a communication etc legally ineffective, paragraph (b) ensures that incorporation by reference using electronic means (e.g. by a hypertext link) is not automatically invalid. However all other legal requirements, for example the need to bring unusual or unexpected terms in an offer to the attention of the offeree, continue to apply and are not affected in any way by Section 8.
Section 8 is based on Section 8 of the Australian Electronic Transactions Act 1999, and Articles 5 and 5 bis of the Model Law on Electronic Commerce.
Section 9 - When the Default Rules in Sections 10 to 13 Apply
Section 9 makes it clear that Sections 10 to 13 set out default rules, which do not apply if the parties to a communication agree otherwise, or if an enactment provides otherwise. Thus parties to a contract can adopt their own rules in relation to when electronic communications are to be treated as sent or received. If an Act contains specific deeming provisions in relation to when or where a communication is to be treated as sent or received, those will prevail over the default rules in Sections 10 to 13.
The default rules in Sections 10 to 13 apply to all electronic communications (whether pursuant to a legal requirement or not) unless the parties agree otherwise, or an enactment provides otherwise.
Sections 10 to 13 address certain legal consequences where electronic communications are used: they do not provide that electronic techniques can be used in any or all circumstances.
The time at which a communication is sent or received, and the place where it is sent or received, may be important for various legal reasons. To give one example, New Zealand's High Court Rules permit proceedings in relation to a contract to be served outside New Zealand if the contract was made in New Zealand. A contract is normally formed at the time, and in the place, where the acceptance is received by the offerer. Sections 10 to 13 are intended to reduce current uncertainty, and avoid unnecessary costs, when applying such rules.
It is important to understand that these provisions do not determine whether or when a communication has legal effect. Whether a document is properly addressed is irrelevant to when it is sent (a letter with an incorrect address is still sent when it is put in the post box). Whether the letter is properly addressed is, however, likely to be relevant to its legal effect (i.e., an improperly addressed letter is unlikely to be legally effective, while a letter sent to the last known address, even though the intended recipient may no longer reside there, probably will be).
The default rules in Sections 10 to 13 are the same as those found in the Australian Electronic Transactions Act 1999, and are based on Article 15 of the Model Law on Electronic Commerce.
Section 10 - Time of Dispatch
Section 10 provides that an electronic communication is treated as being dispatched at the time it first enters an information system outside the control of the originator. That is, as soon as the originator ceases to have control of the communication (and so ceases to be able to prevent it being transmitted), it is dispatched. A person using a PC with dial-up access to the Internet would, under this rule, send an email at the time the "send" button is clicked and the email leaves the PC. Where a computer is attached to a corporate network, communications are dispatched when the email leaves the relevant network - typically when it is sent from the corporate mail server to an ISP's server.
Section 10(2) defines the term "information system" very broadly for the purposes of Sections 10 and 11. It can cover a single PC, a palm pilot, or an entire corporate network. A purposive approach that pays attention to the context of the rule will be required. International precedents are likely to emerge over time.
Section 11 - Time of Receipt
Section 11 provides a default rule in relation to the time of receipt of an electronic communication. An electronic communication is taken to be received at the time the electronic communication enters an information system designated by the addressee for that purpose or, if no particular information system has been so designated, at the time the electronic communication comes to the attention of the addressee.
Merely providing an email address on a letterhead will not amount to designation of an information system for the purpose of receiving electronic communications. An explicit request to send electronic communications to a specified email address (e.g. please email your acceptance to jsmith@brown.co.nz) would probably suffice. What is sufficient in each case will depend on the nature of the communication, and the way in which the addressee has asked that such communications be delivered.
The language is somewhat general and open textured, but follows an international model that is likely to become clearer in its application over time. Meanwhile, it seems likely that in many cases involving Internet communication by email, paragraph (b) will apply and a communication will be taken as received at the time it comes to the attention of the addressee.
Section 12 - Place of Dispatch
Section 12 sets out default rules in relation to the place from which an electronic communication is taken to be dispatched. Where an originator does not have a place of business, the communication is treated as dispatched from the originator's ordinary place of residence. Where the originator does have a place of business, the electronic communication is treated as dispatched from that place of business or, if there is more than one, the place of business that has the closest relationship with the underlying transaction. If there is no one place of business that has a closest relationship with the underlying transaction, the communication is treated as dispatched from the originator's principal place of business.
This rule is particularly important because the place of dispatch (where it has been sent from) is usually not apparent from an electronic communication. An employee of a company may well send emails from a range of places, in a number of countries, in the course of travelling for work purposes. They will all appear to come from the company's mail system. The actual physical location of the employee will generally be irrelevant to the parties, as well as (often) being uncertain. Thus the most sensible default rule is for all such communications to be treated as coming from the company's place of business.
Section 13 - Place of Receipt
Section 13 provides a corresponding rule in relation to the deemed place of receipt of electronic communications. An addressee who does not have a place of business is treated as receiving electronic communications at that addressee's ordinary place of residence. Where the addressee does have a place of business, the communication is treated as being received at that place of business. Where the addressee has more than one place of business, the place of receipt is treated as being the place of business that has the closest connection with the underlying transaction or, if there is no one such place of business, the addressee's principal place of business.
Back to Top