Electronic Transactions (Contract Formation) Amendment Bill

Now we are getting closer to the meat of the Electronic Transactions (Contract Formation) Amendment Bill and that is clause 4. This is the part that has been amended by the Commerce Committee, which was led by Jonathan Young, the MP for New Plymouth, and I do want to thank the committee members for the hard work they did on this piece of legislation. Originally, my clause 4 was actually the purpose for this bill. What I said was: “The purpose of this Act is to establish that, for the purpose of contract formation, an offer is deemed to be accepted by an electronic communication at the time of receipt of the acceptance by the offeror.”

In its wisdom the select committee members—and I am not criticising them in any way, shape, or form—considered that section 3 of the principal Act, the Electronic Transactions Act 2002, sufficiently addressed the purpose of the legislation. Let us just quickly refer to that so that we know what we are talking about here. The purpose of the Electronic Transactions Act 2002 says: “The purpose of this Act is to facilitate the use of electronic technology by—(a) reducing uncertainty regarding—(i) the legal effect of information that is in electronic form or that is communicated by electronic means; and (ii) the time and place of dispatch and receipt of electronic communications;”. That is the point we laboured in the previous debate because they did not effectively manage to achieve that by the looseness of the language.

The second part of the purpose set out in section 3(b) is “providing that certain paper-based legal requirements may be met by using electronic technology that is functionally equivalent to those legal requirements.” The select committee members in their wisdom decided that referring to the purpose of the principal Act would be sufficient so that they did not need to have a particular purpose in this bill. As I say, that is important.

The Commerce Committee decided that anyone seeking to understand the thinking behind this legislation—my member’s bill—would be able to gain that understanding by looking at the purpose of the principal Act, which was passed 12 years earlier. To be honest, I am not sure that I necessarily agree with the logic of the select committee. Frankly, I would have preferred that my original purpose about why this particular bill was important had stood. But I am not going to die in a ditch over it. What they were trying to do in terms of economy of words and expression—not having extraneous or otiose clauses in the legislation—is important, but still, it would be fair to say that it rankles with me a little bit that the select committee chose to alter the way that I put the bill together, but I still think it hangs together reasonably well.

So what we have now in clause 4 is a fairly simple clause. It says: “Section 4 amended (Overview)—In section 4(b), replace “13” with “13A”.” I thought I would explain to the Committee just what the committee was trying to achieve there. It says that section 4 of the principal Act should be amended. If we look at section 4 of the original 2002 Act, it says: “Overview—In this Act,—(a) matters concerning the legal effect of information that is in electronic form or that is communicated by electronic means are set out in section 8: (b) default rules about the time and place of dispatch and receipt of electronic communications are set out in sections 9 to 13:”. The new clause in my amendment bill replaces “13” with “13A”. So that is really just to point out that the default rules about the time and place of dispatch and receipt of electronic communications are set out in sections 9 to the new section 13A, which we will come to in clause 5 of this member’s bill. That is the key.

So if we run through those sections, we will just get an idea of the sorts of things that have been considered in the bill. The first of those is when the default rules in section 10 to 13 apply, and the time of dispatch—that is, an electronic communication is taken to be dispatched at the time that the electronic communication first enters an information system outside the control of the originator. [Interruption] Pardon? OK. All the details such as time of receipt and place of dispatch will give you an idea of where we have got to. The select committee did away with my purpose in clause 4 and introduced this new clause 4, which really just locates this amendment bill within the original Electronic Transactions Act. Thank you.

Sat sri akaal, Mr Chair, and thank you very much for the opportunity. We are now debating clause 4 of the Electronic Transactions (Contract Formation) Amendment Bill. The bill has really progressed very well this evening, and we hopefully will be concluding the Committee stage of this bill by the end of today.

Clause 4 as introduced detailed the purpose of the bill. The Commerce Committee considered that section 3 of the principal Act sufficiently addressed the purpose of the legislation. A purpose clause is unnecessary in an amendment bill. So that is why we made some amendments to that clause. The select committee was well chaired by Jonathan Young, and I would like to acknowledge him for his leadership in the Commerce Committee. The committee recommended—

💬 Tim Macindoe: Very good chairman.

He is a very good chairman. He is not here today. His absence is very much—

💬 Tim Macindoe: He brings gravitas and dignity—

Exactly. The select committee recommended that clause 4 be amended to update the overview in section 4 of the Act, to add the reference to new section 13A.

Defining the time of receipt and designated information was also considered. The select committee considered whether the terms “time of receipt” and “information system” used in sections 10 and 11 of the principal Act lacked clarity. There were so many things that were missing in the original Act, and I congratulate this member on bringing this bill to the House. The principal Act also stated in section 35 that it was to be reviewed within 2 years after commencement. That still has not been picked up. The committee was also not persuaded that the terms “time of receipt” and “information system” lacked clarity, and considered that those terms were in no need of definition. So clause 4 is amended by the select committee, and I propose that it should be acted upon.

I move, That the question be now put.

I congratulate Paul Goldsmith again. Regarding the Electronic Transactions Act 2002, the main purpose of that Act is to reduce uncertainty about the legal effect of electronic information and communications, and also the uncertainty about the time and place of dispatch and the receipt of electronic communications. The Act defines basically only the time of dispatch and also the time of receipt, but not really the time when the contract is formed. So this bill, the Electronic Transactions (Contract Formation) Amendment Bill, will tidy up that particular loophole and will be particularly good for providing certainty to electronic contracts.

Clause 4 agreed to.

Clause 5 New section 13A inserted (Time of communication of acceptance of offer)