The past two decades have seen the rapid expansion of electronic-based transactions and increased client expectations for efficiency and expedient completion of commercial transactions.  Despite the integration of the internet into our everyday lives and our immersion in App-based software, there remains some misconception that parties are not bound to perform an agreement unless they physically put pen to paper and sign acceptance. 

 The purpose of this article is to remove common misconceptions about e-commerce transactions and clarify the circumstances in which parties are bound to electronically formed agreements.

 All information in this article is written by way of general comment and any reader wishing to act on information contained in this article should first approach their legal professional advisors for properly considered professional advice which takes into account the reader’s specific situation. 

 Electronic communications and “traditional” contracts

 General contract principles remain applicable to contracts formed electronically with these principles merely expanded to account for emerging technology.

 Whereas traditionally an offer may have taken the form of a letter or newspaper advertisement, an electronically communicated offer may take the form of a website advertisement, online auction, mass email, chatroom conversation, social media posting or direct email exchange.  Whether a legal offer is made is resolved objectively, having regard to the documentary evidence of the parties.[1]  Provided a clear, unambiguous statement of an offer from one party (the offeror) to another (the offeree) capable of acceptance has occurred, an offer is made.[2]  The offer must clearly indicate a willingness to enter into legal relations with the offeree and not merely to enter discussions or negotiations.[3]  Provided these factors are able to be established, there is no reason why an offer made electronically is not valid.

 Effective acceptance of an offer must be clear unequivocal acceptance of the offer complying with any requirements contained in the offer; or, where there are no requirements, be communicated to the offeror.[4]  There is no impediment to this occurring via electronic means, for example, by email or web-chat.  As for the formation of the contract, the Federal Court of Australia considered the issue of acceptance via email in the case of Olivaylle Pty Ltd v Flottweg GMBH and Co KGAA (No 4)[5] and noted that the “contract was made where the acceptance was received”.[6]  When an email is “received” depends on whether the offeror designated a particular email address for receipt of correspondence.  If so under the Acts,[7]this is when the email is capable of retrieval by the offeror.  If no email address is designated and an email is just being sent to an undesignated address, it is when the offeror is not only capable of retrieving the email, but also has knowledge that the communication has been sent to that email address.

 Particular to the online setting is “click-wrap contracts” - that is a contract formed by clicking on an advertisement (being an invitation) and completing a hypertext order form (or confirming an automated order form) which the offeror (the prospective purchaser, for example) then confirms agreement to by clicking a button labelled ‘I accept’, ‘Submit’, or ‘Purchase’.  The offeree and provider of the invitation (the prospective seller, for example) receive confirmation of the now ‘offer’ instantly and is able to accept it by placing the order.  Note the role reversal with the person receiving the goods making the offer in this context, and the supplier entity accepting the offer to supply goods (but presenting the original advertisement, or invitation to treat).[8]

 As with non-electronically formed contracts, terms may be implied into a contract by a court or implied by statute.  In the absence of a pre-existing rule, courts may imply terms by fact provided certain criteria are met.[9]  For terms to be incorporated into contracts, it is generally sufficient to show that the party had notice of the terms – it is not necessary to prove that the party took the extra step of reading them.[10] 

 Key examples of incorporating terms are found in the “click-wrap contracts”; the terms are presented to a user via a dialogue box with the user prevented from proceeding further until they have clicked to say that they have “read and understood” those terms.

 Where terms are hyperlinked and drawn to the attention of parties, these terms are found to be incorporated into the contract provided reasonable attention is drawn to the terms during the offer and acceptance stages.[11]

 The above clearly indicates that contracts formed electronically are just as legally binding as those formed via traditional non-electronic means.

 Electronic transactions

 When have you validly “signed”?

 The various Electronic Transactions Acts[12]set out the signature requirements for electronic contracts. 

 The general position is that the signature requirements for an electronic contract will be taken to have been met if:

 a method is utilised to identify the person signing and to indicate that person’s intention in respect of the information communicated; and

 

  1. the method used to identify the person and that person’s intention was either:

 

  1. as reliable as appropriate for the purpose for which the electronic information was generated or communicated, in light of all the circumstances and having regard to any relevant agreements; or

 

  1. proven in fact to fulfil the functions described in 2a. by itself or together with further evidence.

 

  1. the person who is providing the signature consents to the signing requirement being by the method in paragraph 2.

 

Where you are contracting with a Commonwealth Government Entity, there is an additional requirement for electronic signatures to be valid, that is, the method used to identify the person must be in accordance with the particular information technology requirements set out by that particular Department, for example, some of the Australian Taxation Office’s requirements are set out in ATO Practice Statement Law Administration PS LA 2005/20.[13]

 How do these provisions apply practically? 

 There have been a number of decisions which have clarified the application of the signature requirements, with select decisions discussed next. 

 The Commonwealth Act[14] was tested in the case of Getup Ltd v Electoral Commissioner[15] whichinvolved the use of a digital pen to sign and witness a claim form for enrolment on the electoral roll.  The Electoral Act[16] required any signature on “electoral paper” be signed by a person with his or her “personal signature”.[17]  The Commissioner determined that the electronic signature on a claim form completed via laptop trackpad was not sufficient.  In the proceedings, the Commissioner raised concerns about the degree of pixilation and, given the degree of the pixilation, the potential for disparity between signatures if the submitted digital signature was subsequently compared to a future postal vote. The Commissioner further argued that the electronic submission was not as reliable as appropriate for the purpose for which the information was communicated; however the Court noted that the Commissioner accepted the faxing and emailing of JPEG files[18].  Applying an objective test, the Court found that as pixilation could occur via the other communication methods accepted by the Commissioner, that the signature was valid.

 The Supreme Court of Queensland was asked to determine whether a finalised contract had been agreed by way of emailed negotiations in the case of Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd[19]Negotiations took place between a prospective purchaser and Seller’s agent for the prospective purchase of a service station with the offer notably communicated ‘subject to contract’ and subsequently accepted ‘subject to execution of the contract’.  This decision ultimately turned on the contents within the email negotiations that took place, as, where it is alleged a binding agreement has been reached via correspondence, the correspondence as a whole must be considered to ascertain the alleged terms[20] - it is not appropriate that only one particular piece of correspondence is isolated and examined.[21]  Ultimately it was determined that there was sufficient evidence in the email exchanges to satisfy the legal requirements for the formation of a contract and, that the identification of the parties via their email signatures was sufficient for signing to have occurred.  It is important to note that the usage of words such as “subject to contract” is measured against the relevant context; that is to say, even if these words are used, if it is sufficiently clear from the correspondence that the parties intend to be bound immediately, a binding contract will be formed.[22]  Here, it was found in the plaintiff’s favour that a concluded agreement had been reached as to the sale of the service station. 

 However, do you need to have a full electronic signature?  You will recall that we discussed above the incorporation of standard terms into an electronic contract via hyperlink. 

 This situation was recently considered by the New South Wales Supreme Court (NSWSC) in Gonzalez v Agoda Company Pte Ltd[23] where a prospective traveller booked via Agoda’s website.  As part of the process she completed her personal information and was directed to a “Payment Details Page” where she completed her payment information; relevantly, this webpage had a link to Agoda’s standard terms and conditions of booking making the laws of Singapore the exclusive jurisdiction of the soon to be formed contract.[24]  Above the button “Book Now”, were noted the words “I agree with the booking conditions and general terms by booking this room…[25]  The plaintiff proceeded to click “Book Now” and when a dispute subsequently arose between her and Agoda, sought to argue that the exclusive jurisdiction clause within the standard terms was not binding.  The NSWSC accepted the submissions from counsel for Agoda that the provision of credit card details and the action of clicking on “Book Now” amounted to the plaintiff providing her signature in agreement to the contract and, as a result of signing, the standard terms were incorporated into the contract - irrespective of whether she had read them.[26] 

 Decided cases show that:

 

  1. an email signature or typed sign-off comprising a person’s name or identifier are sufficient forms of identification;

 

  1. in the absence of vitiating factors, successful transmission of the electronic communication seems sufficient to prove that the form of the transmission was adequate;

 

  1. where parties have engaged in electronic communications, it is assumed that the parties have consented to signing via this method.

 

Do you ever need an original signature anymore?

 Yes. 

 The Electronic Transactions Acts[27] are all subject to existing or subsequently enacted legislative requirements for original signatures. Additionally, each State and Territory has its own exclusions, generally contained within the correlating regulations or within the schedules to the respective Acts.  For example, in Queensland, section 7A[28] excludes the operation of the Act[29] to the 17 exclusions contained within Schedule 1 of the Act[30] which include:

 

  1. an authorisation under the Trust Accounts Act 1973 (Cth);

 

  1. promissory notes;

 

  1. foreign exchange transactions;

 

  1. any signature required by a person to be filed with a court or tribunal for a proceeding; and

 

  1. any requirement requiring a document to be attested, authenticated, verified or witnessed by a person other than the author of the document.  As witnessing cannot occur remotely[31], that is, the witness must be present at the time the signer signs, the signature of the witness must be original, it cannot be implied by the provisions of the Acts, for instance by email confirmation.

 The witnessing exemption is mirrored in NSW[32].  The Northern Territory contains exemptions within its Regulations[33], in particular, it exempts signatures relating to Wills[34], Powers of Attorney[35] and Personal Service[36].

 Interestingly, the Commonwealth Regulation[37] contains a list of Commonwealth legislation which excludes the provisions of electronic validity, writing and signature from operating.  These are in addition to the exclusions contained in Schedule 1 of the Commonwealth Act relating to certain migration and citizenship documents.[38]

 It is vitally important when negotiating with any Commonwealth entity that you ensure that it has the ability to be bound electronically, for example, an entity may not be bound to its acceptance of an offer until its representative physically signs if it is excluded from doing so by virtue of the Act.

 Take home

 It is important to remember that it is only in limited circumstances that an ‘original’ signature is required on documents.  Where you intend to negotiate and transact electronically, you must ensure that your particular contract does not fall into one of the exemptions discussed above, lest you find that you have an unenforceable agreement.

 Care and consideration should be taken through the negotiating process to ensure that email exchanges reflect the intended terms of the end contract and that any terms not agreed are clearly identified.  As has been shown, binding and enforceable contracts may be made by parties entirely via email exchange and digital signature.  It may be difficult to negotiate a variation to a formed contract to insert further terms with the other party once the initial contract is formed. 

 Electronic transacting is an efficient way to complete commercial arrangements across multiple jurisdictions and with multiple parties.  There is no reason for consumers and businesses to not take full advantage of the e-commerce landscape, provided they keep the rules and regulations in mind.

  Belinda Pinnow

Senior Associate

 P: 07 3859 4531

F: 07 3221 8858

E: belinda.pinnow@jhklegal.com.au

 www.jhklegal.com.au



[1]Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540

[2]Henthorn v Fraser [1892] 2 Ch 27 (CA) at 37

[3]Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424

[4]George Hudson Holdings Ltd v Rudder (1973) 128 CLR 387 at 395 per Menzies J

[5][2009] FCA 522

[6]Ibid at [25]

[7]Electronic Transactions Act 1999 (Cth); Electronic Transactions Act 2000 (NSW); Electronic Transactions (Victoria) Act 2000 (Vic); Electronic Transactions (Queensland) Act 2001 (Qld); Electronic Transactions Act 2000 (SA); Electronic Transactions Act 2011 (WA); Electronic Transactions Act 2000 (Tas)

[8]Lim Y F (2008) Cyberspace Law - Commentaries and Materials (2nd Ed), Oxford University Press, Sydney at page 72.

[9]BP Refinery (Westernport) Pty Ltd v Hastings SC (1977) 180 CLR 266

[10]Parker v South Eastern Railway Co (1877) 2 CPD 416 (CA); Causer v Browne [1952] VLR 1

[11]Lim Y F (2008) Cyberspace Law - Commentaries and Materials (2nd Ed), Oxford University Press, Sydney at page 73.

[12]Electronic Transactions Act 1999 (Cth); Electronic Transactions Act 2000 (NSW); Electronic Transactions (Victoria) Act 2000 (Vic); Electronic Transactions (Queensland) Act 2001 (Qld); Electronic Transactions Act 2000 (SA); Electronic Transactions Act 2011 (WA); Electronic Transactions Act 2000 (Tas)

[13] http://law.ato.gov.au/atolaw/view.htm?locid=%27PSR/PS200520/NAT/ATO%27&PiT=20060405000001

[14]Electronic Transactions Act 1999 (Cth)

[15] [2010] FCA 869

[16] Commonwealth Electoral Act 1918 (Cth)

[17] Getup Ltd v Electoral Commissioner [2010] FCA 869 at [9]

[18]Getup Ltd v Electoral Commissioner [2010] FCA 869 at [21]

[19][2015] QSC 119

[20]Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd [2015] QSC 119 at [34] citing Kirby P in Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551 at 14, 522

[21]Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd [2015] QSC 119 at [34] citing Kirby P in Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551 at 14, 522

[22]Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd [2015] QSC 119 at [36]

[23]Gonzalez v Agoda Company Pte Ltd [2017] NSWSC 1133

[24]Gonzalez v Agoda Company Pte Ltd [2017] NSWSC 1133 at [8] – [10]

[25]Gonzalez v Agoda Company Pte Ltd [2017] NSWSC 1133 at [13]

[26]See generally, Gonzalez v Agoda Company Pte Ltd [2017] NSWSC 1133 at [44] – [49]

[27]Electronic Transactions Act 1999 (Cth); Electronic Transactions Act 2000 (NSW); Electronic Transactions (Victoria) Act 2000 (Vic); Electronic Transactions (Queensland) Act 2001 (Qld); Electronic Transactions Act 2000 (SA); Electronic Transactions Act 2011 (WA); Electronic Transactions Act 2000 (Tas)

[28]Electronic Transactions (Queensland) Act 2001 (Qld)

[29]Electronic Transactions (Queensland) Act 2001 (Qld)

[30]Electronic Transactions (Queensland) Act 2001 (Qld)

[31]Legal Services Commissioner v Bentley [2016] QCAT 185

[32]Section 5 of the Electronic Transactions Regulation 2017 (NSW)

[33]Electronic Transactions (Northern Territory) Regulations

[34]Section 2 of the Electronic Transactions (Northern Territory) Regulations

[35]Section 3 of the Electronic Transactions (Northern Territory) Regulations

[36]Section 4 of the Electronic Transactions (Northern Territory) Regulations

[37]See Schedule 1 of the Electronic Transactions Regulation 2000 (Cth)

[38]See Schedule 1 of the Electronic Transactions Act 1999 (Cth)

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