The Electronic Transactions Act 2000 (NSW) (‘ETA (NSW)’) aimed to deal with the ‘problem’ of facilitating the use of electronic transactions (including promoting business and community confidence in the use of electronic transactions).1 In 2010, however, Eliza Mik criticised the ETA (NSW) for creating ‘a separate regime for contracts formed by electronic means’ and said ‘it is debatable whether such duality promotes certainty and predictability.’2

By contrast, the former Commonwealth Attorney-General, Daryl Williams, stated during parliamentary debates on the Electronic Transactions Bill 1999 (Cth) that ‘As current Australian law neither recognises nor denies the validity of electronic communications, the [Electronic Transactions Bill 1999] establishes the basic rule that a transactions is not invalid because it took place by means of an electronic communication.’3

Andrew Field’s article ‘Electronic commerce: encouragement from Canberra’ (2000) supported the Attorney-General’s view that clarity in regard to the legality of electronic contracts was needed in order to overcome a basic impediment to the take up of electronic commerce over the Internet.4 Despite Mik’s contentions, the ETA (NSW) has not substantially deviated from the existing common law positions.

Offer

Sharon Christensen provides an accurate and easily understood definition of an offer the identifies its three key aspects.5 An offer must:

  1. be an indication by one party of their willingness to enter into a contract,
  2. be sufficiently clear to allow a contract to be formed without further negotiation, and
  3. indicate a willingness to be bound by the terms of the offer.

Further, an offer does not need to be directed at a specific party: it may be issued to the public at large.6

Failure to meet the criteria outlined by Christensen usually means that a purported offer will be considered a non-binding invitation to treat — it implies nothing more than a willingness to negotiate a contract, and thus a contract cannot be formed immediately upon acceptance.7

In Christensen view, the ‘Electronic Transactions Act 1999 (Cth) and its State analogues do not have any effect on the application of the common law to the making of an offer.’8 Indeed, the ETA (NSW) currently sets out the requirements for electronic contracts in such a way that it codifies the pre-existing common law position.9 There is as a result negligible difference between the common law position and the provisions of the ETA (NSW) regarding offer.

Nevertheless, Mik does emphasise that ‘most difficulties in transposing the offer and acceptance analysis to novel transaction scenarios result from the fact that is is a model.’10 Determining whether an offer exists relies upon establishing what the intent of the alleged offer actually is (or was). This is considered by Christensen:

In a paper environment the ultimate conclusion will depend upon the language used. Will this principle apply equally to an advertisement in the newspaper or on the Internet? Is the only difference the increased circulation offered by the Internet or does the nature of electronic advertisements add a layer of complexity to the question?11

Mik provides answers to these questions, writing that it is ‘the content of a statement, not the method of its communication that must be analysed to determine its legal effect.’12

An example both Mik and Christensen cite is that of the British of company Argos which offered televisions on sale for £2.99 rather than £299.99.13 There is little doubt that Argos’ intention was not to offer televisions at such a discounted price. It is therefore clear that the ‘offer’ was merely an invitation to treat, as it failed to represent the actual intention of the seller. As Christensen puts it:

if the website is worded and arranged in such a way as to encourage the formation of a contract, the critical question is whether the seller intended to be bound by any response or whether the seller wanted to decide whether to enter a contract and with whom.14

It is definitely possible to ascertain the difference between offer and invitation to treat regardless of medium, but it is difficult to predict whether a court would consider the matter in a medium-neutral manner without legislative guidance. To this end, the ETA (NSW) does not alter the common law requirements of an offer, but merely confirms offers created by electronics means are to be considered no differently to contracts created by other forms.

Acceptance

Contracts are formed at the time and place that an offeror receives an acceptance.15 An acceptance must correspond to the offer and cannot introduce any additional terms to the agreement.16 (Otherwise it would be considered a separate offer).

Common law does not dictate a specific form of acceptance, but the appropriateness of the method of acceptance will rely upon the circumstances17 and the terms of the offer ‘may dictate the form and method of acceptance.’18 Where they do not, an acceptance may be given by the same or similar method as the offer: an offer made by telephone may be accepted by telephone, by fax, by telex or in person, for example.19

Although an offer may be revoked up until the point of acceptance, there is a narrow exception to this, referred to as the ‘postal acceptance rule.’ The following formulation of this rule is the accepted common law position in Australia:

Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communication the acceptance of an offer, the acceptance is complete as soon as posted.20

In 1998, John Dickie wrote that it was ‘unclear whether the posting rule or the “normal” rule applies to acceptances sent by email’,21 however the postal rule ‘does not apply to instantaneous modes of communication such as the telephone or telex.’22 The postal acceptance rule has not been applied to means beyond the post and telegram, and ‘there seems to be no reason why it should be extended to email.’23

Dickie argues that the fact that emails more closely resemble instantaneous communications such as the telex and facsimile is enough to suggest that the rule should not apply to electronic acceptances of offers.24 In the 2008 South African case Jafta v Ezemvelo KZN Wildlife it was stated that

the assumption that postal contracts are concluded when a letter or telegram of acceptance is handed at the post office cannot apply to acceptance by email or SMS because the forms of communication differ substantially.25

It could be argued that the capability for electronic acceptance would already exist if electronic offers were considered valid: if an offer could be made electronically, then an acceptance would under common law rules need to take the form required by the terms or by a same or similar method.

In Jafta v Ezemvelo it was determined that an SMS qualified as an appropriate means of communication acceptance as a result of implied consent by the offeror that this was appropriate, and that as it fell under the definition of ‘electronic communications’ it was enforceable in law.26

Of significance here is that in this case the Electronic Communications and Transactions Act 2002 (South Africa) merely provided an answer to the question of whether it could be considered valid; the common law principles of acceptance still applied. This is the same under the ETA (NSW), which gives ‘electronic communications’ a broad definition in order to make them valid.27

The ETA (NSW) provides that unless otherwise agreed ‘the time of the receipt … is the time when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee.’28 This is based on the premise that a business would regularly attempt to retrieve emails, and most email software provides on-screen notifications.29

In Bauen Constructions Pty Ltd v Sky General Services Pty Ltd, Sackar J ruled that the ETA (NSW) does ‘not require an email to be opened, let alone read.’30 There is precedent for this outside the Act:

In R v Pontypridd Juvenile Magistrates Court [1988] … it was accepted that an electronic transmission sent from a police station on a Friday … and printed out … on the following Monday, was effective as of the Friday. The court viewed this situation as analogous to the posting of a letter or the sending of a fax which arrives in the relevant office on time, even though it is not read until later.31

This is was not, however, the postal acceptance rule. It was the notion that if an acceptance is reasonably capable of being read by the offeror, it is valid. There is no change between the common principle and the provisions of the ETA (NSW): it is merely an affirmation that this principle is to be applied.

Formalities under the Conveyancing Act 1919

Electronic land dealings had been contemplated prior to the ETA (NSW): ‘The development of electronic delivery of land registration services in Ontario began in the late 1980s,’32 demonstrating that legislation was not strictly necessary to facilitation land transactions.

The Ontario Ministry of Consumer and Commercial Relations began building the Province of Ontario Land Registration Information System (POLARIS) in conjunction with the company Teranet, and it was launched in 1999.33 Christensen explains:

The web based system allows [the registering of] dealings electronically … The user [identifies] the type of document they want to create and register … After preparing the document, the lawyer makes it available electronically to the lawyer representing the other party. Once the authority of the client is obtained the information is certified as complete by the lawyer for each party by attaching their electronic signature.34

Such a system would fulfil the requirement of the Conveyancing Act 1919 (NSW) that contracts for the sale of land must be signed and in writing.35 The ETA (NSW) provides that if, under a law of NSW, a person is required to give information in writing, that requirement can be met electronically if there is consent between the parties.36 This does not alter the common law position: an offer implicitly or explicitly dictates a method of acceptance37 and this position is affirmed by the ETA (NSW).

Mark Sneddon raises the issue of archiving documents: the principle that writing evidences a transaction and exists to create a historical record of that transaction which can be considered authoritative.38 However, as the Ontario examples shows, an adequate system that provides for independent archiving of electronic documents is as effective as hardcopies, if not more when one considers the potential for near-instantaneous retrieval of documents.

The requirement that a contract be signed can be met electronically as demonstrated by the Ontario example.39 At common law, there is no clear indication of what exactly constitutes a signature. Courts have accepted a range of markings to indicate a signature — including initials and rubber stamps — as equivalent to written signatures.40

Christensen writes that

It is clear that modern authorities are more concerned with whether the particular signature fulfils the function of a signature as intended by the legislation rather than whether the signature is in a particular form.’41

If considered in relation to the ETA (NSW), the implications are essentially the same:

  1. a signature is a proven method used to identify the person and indicate their intention (by itself or with further evidence),
  2. a signature must be as reliable as appropriate for this purpose, and
  3. consent must be given to the method by the person receiving the signature.42

This is in line with existing common law principles that acceptance be communicated by a means indicated by the offer or offeror and statute law regulations under the Conveyancing Act 1919 (NSW) in regard to the formalities of land dealings.

Concluding remarks

Contrary to Mik’s argument that a separate regime has been introduced to govern electronic contracts in NSW, the Electronic Transactions Act 2000 (NSW) does no more than complement and affirm the existing common law positions in order to apply them to electronic contracts.

The combined effect does not create any uncertainty or unpredictability; rather it confirms that the requirements of offer, acceptance and formalities (especially in the context of land dealings) are applied to electronic contracts. This eliminates any question over the validity of electronic offers and acceptances, and denies the assumption that all websites should be exclusively treated as invitations to treat (or exclusively an offer).

The Act achieved the aims stated by the Commonwealth Attorney-General in 1999:

that a requirement or permission … for a person to provide information in writing, to sign or produce a document … can be satisfied in electronic form, subject to certain minimum criteria being satisfied.43

These minimum criteria have been derived from common law with slight modifications to guide the courts.




  1. Electronic Transactions Act 2000 (NSW) s 3.

  2. Eliza Mik, ‘“Updating” the Electronic Transactions Act? — Australia’s Accession to the UN Convention on the Use of Electronic Communications in International Contracts 2005’ (2010) 26 Journal of Contract Law 184, 207.

  3. Commonwealth, Parliamentary Debates, House of Representatives, 30 June 1999, 7851 (Daryl Williams).

  4. Andrew Field, ‘Electronic commerce: encouragement from Canberra’ (2000) (74)(4) Law Institute Journal 54, 55.

  5. Sharon Christensen, ‘Formation of Contracts by Email — is it Just the Same as the Post?’ (2001) 1(1) Queensland University of Technology Law & Justice Journal 22, 26.

  6. See eg Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256.

  7. Christensen, ‘Formation of Contracts by Email’, above n 5, 26.

  8. Ibid 29.

  9. Electronic Transactions Act 2000 (NSW) s 14B.

  10. Mik, above n 2, 195.

  11. Christensen, ‘Formation of Contracts by Email’, above n 5, 27.

  12. Mik, above n 2, 195.

  13. Ibid 194; Christensen, ‘Formation of Contracts by Email’, above n 5, 27.

  14. Christensen, ‘Formation of Contracts by Email’, above n 5, 27

  15. Ibid 29.

  16. Ibid.

  17. Ibid.

  18. Ibid.

  19. Ibid 30.

  20. Henthorn v Fraser [1892] 2 Ch 27 [33].

  21. John Dickie, ‘When and where are electronic contracts concluded?’ (1998) 49(3) Northern Ireland Legal Quarterly 332.

  22. Ibid.

  23. Ibid.

  24. Ibid.

  25. Jafta v Ezemvelo KZN Wildlife [2008] ZALC 84 (Labour Court) [79].

  26. Ibid [112].

  27. Electronic Transactions Act 2000 (NSW) s 5.

  28. Ibid s 13A.

  29. Dickie, above n 21, 333.

  30. Bauen Constructions Pty Ltd v Sky General Services Pty Ltd [2012] NSWSC 1123 [77].

  31. Dickie, above n 21, 333–334.

  32. Sharon Christensen, ‘Electronic Land Dealings in Canada, New Zealand and the United Kingdom: Lessons for Australia’ (2004) 11(4) Murdoch University Electronic Journal of Law <http://www.murdoch.edu.au/elaw/issues/v11n4/christensen114.html>.

  33. Ibid.

  34. Ibid.

  35. Conveyancing Act 1919 (NSW) s 54A.

  36. Electronic Transactions Act 2000 (NSW) s 8.

  37. Christensen, ‘Formation of Contracts by Email’, above n 5, 29–30.

  38. Mark Sneddon, ‘Legislating to Facilitate Electronic Signatures and Records: Exceptions, Standards and the Impact of the Statute Book’ (1998) 21(2) University of New South Wales Law Journal 334, 348-349.

  39. Christensen, ‘Electronic land dealings,’ above n 32.

  40. Sharon Christensen, ‘The Statute of Frauds in the Digital Age — Maintaining the Integrity of Signatures’ (2003) 10(4) Murdoch University Electronic Journal of Law <http://www.murdoch.edu.au/elaw/issues/v10n4/christensen104.html>.

  41. Ibid.

  42. Electronic Transactions Act 2000 (NSW) s 9.

  43. Commonwealth, Parliamentary Debates, House of Representatives, 30 June 1999, 7851 (Daryl Williams).