Introduction
Background: Electronic Transactions Act 2002
The process of enacting 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 legislative 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 Australia's.
Further information can be found on the Electronic Transactions Act index page.
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 of the ETA);
- 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 statutory requirements) (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, including the default rules for time and place of dispatch and receipt, apply to all electronic communications.
It is important to understand that most of the provisions in the ETA are found in Part 3, and 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" - see sections 14 and 15). For most communications, for instance those relating to contract formation, these provisions are irrelevant because they are not made pursuant to a legal requirement as defined in the ETA. 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.)
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.
In addition, the ETA is technology neutral. It provides that you can use electronic methods to meet paper-based requirements and includes rules that must be complied with in order to meet the test of functional equivalence. It does not, however, specify particular technologies that might be used to meet certain legal requirements.
Regulation and Form Making Powers and Prescribed Forms
Section 15(1) sets out that the basic requirements that must be met in order to use electronic technology to meet legal requirements. These are:
- the provisions in Subpart 2 (Sections 18-32) must be satisfied;
- in addition, any conditions prescribed by applicable regulations made under section 36 (e.g. in relation to the technology to be used, or in relation to format of a communication) must be satisfied.
For certain legal requirements, extra conditions may need to be prescribed in order for these requirements to be met using electronic methods. Section 36 permits regulations to be made that prescribe such extra conditions.
The reason for providing for extra conditions to be prescribed is that there may well be situations where the policy goals of other legislation require a higher or more prescriptive standard to be met in relation to use of electronic technology. For example, where particular records are required to be retained to verify information it may be appropriate to keep them in electronic form only if the electronic form is an image file of the paper document, rather than simply being an electronic transcription of the content of the paper document.
Section 36 specifies other purposes for which regulations can be made, e.g. to address such issues as deemed time of receipt and prescribing electronic forms.
Section 37 makes it clear that a person who is authorised to prescribe paper-based forms also has the power to prescribe electronic forms.
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