The use of e-mail as a business tool has become increasingly widespread in the last few years. This has given rise to the need to clarify rules relating to electronic communications, such as when a document:
- is “in writing”,
- has been signed, and
- forms part of a contract.
The Electronic Transactions Act 2002 was passed on 10 October 2002. It clarifies uncertainty regarding electronic communications, and provides for certain paper-based legal requirements to be met using electronic technology.
It an Electronic Transaction Compulsory?
You have the right to elect to use a paper or electronic based system. Information which needs to be provided “in written” can only be provided in an electronic form if the party receiving it consents to receiving it in that form. Where a person uses e-mail to make an offer, they will be treated as having consented to acceptance by e-mail.
Receipt of Information
It can be important to determine when and where electronic communications are received or dispatched. The Act sets out default rules in relation to the receipt or dispatch of e-mails. Note that the default rules will not apply if the parties sending and receiving the e-mails have predetermined how those e-mails are to be treated.
The new rules will be important where time of notification of information by e-mail is important, or where it is important that a document is dispatched or received from or at a particular address.
Time of Receipt
An e-mail is received when, if a person has nominated an information system to receive that communication, it enters that system, or in any other case where it comes to the attention of the addressee.
A person takes a risk where they nominate an e-mail address for communications, but have an unreliable e-mail system, which delays receipt of the information. If they had not nominated an e-mail address, they would be deemed to receive the e-mail only once it came to their attention.
Incorporation of Terms
Additional terms can be incorporated into an electronic communication simply by reference to those terms, such as reference to a supplier’s terms and conditions on a website. It is not necessary to attach the additional terms to the communications.
Sometimes you cannot avoid using paper. Documents such as public notices, wills, codicils, and affidavits cannot be in electronic form.
What is ‘in writing”?
Where there is a legal requirement for a document to be in working, recorded in writing or given in writing, an electronic document will meet that requirement if:
- it is readily accessible so as to be useable for subsequent reference; and,
- Where information is provided, the person receiving it has consented to its supply in electronic form.
An electronic signature is simply a means of identifying a person and indicating their approval of the information. The signature has to be as reliable as is appropriate given the type of information and scope of the contact. Legal requirements for a signature to be witnessed can be met by the witness also providing an electronic signature.
What do you Need to Keep?
Where there is a legal requirement to retain electronic documents, that requirement will be met if the electronic form provides a reliable means of assuring the information’s integrity is maintained, and the information can be readily accessed. If you wish to keep documents in electronic form you need to ensure the documents cannot be altered once stored. The origin, destination, and time of dispatch and receipt should also be kept.
The Electronic Transactions Act is likely to have a significant impact on the way we do business in the future. This should be a timely reminder to analyse your practices and systems with regard to electronic communications. If you need assistance please contact us.
DISCLAIMER: All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers, for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.