The Contract and Commercial Law Act clarifies the legal effect of information in electronic form, or communicated electronically.
Electronic transactions and your rights
The Contract and Commercial Law Act (CCLA) aims to facilitate the use of technology in everyday transactions and to reduce uncertainty around:
- the legal effect of information which is in electronic form or which is communicated electronically
- the time and place in which electronic communications are sent and received.
The Act also provides that certain legal requirements that need to be made in writing can be met in an electronic form which is equivalent to the legal requirements.
Terms commonly used
Electronic communication means communication by electronic means such as electrical, digital, magnetic, optical, electromagnetic, biometric, and photonic.
Information includes documents, a signature, a seal, data, text, images, sound, or speech.
Transaction includes non-commercial transactions and can be a single communication or the outcome of multiple communications.
Information system means a system for producing, sending, receiving, storing, displaying, or otherwise processing electronic communications, eg the server.
What you need to know
The CCLA clarifies that an electronic transaction or communication cannot be denied legal effect solely because it is in electronic form. It also has rules around the time and place of sending or receiving an electronic transaction such as email. However the Act doesn’t clarify exactly when a contract is formed online.
When an electronic transaction is sent and received
You send an electronic communication at the time it first enters an information system outside your control. For example with emails, this is usually when you hit send and an email enters the receiver’s server.
You receive an electronic communication at the time that it enters your information system. For example if you have chosen your email address, then it is received at the time an email enters your inbox. In any other case the transaction is received when the receiver becomes aware of it.
Where an electronic communication is sent from and received
An email is taken to be sent from the sender’s usual place of business or if there is no place of business, from the sender’s home. Similarly, an email is received at the receiver’s place of business of if there is none, at their home. If there is more than one place of business then it is the main place of business.
When a contract is formed
In deciding when a contract was formed, acceptance of an offer by electronic means takes place when acceptance is communicated to the other party, unless:
- that was not agreed to by both parties
- it is excluded by law.
Note that for email, if there is a system error and email acceptance is delayed, or the email is never received, then it is uncertain whether a contract has been made.
You can comply with paper-based statutory requirements electronically if certain requirements are met. For instance where there is a legal requirement that information:
- be in writing – the information must be easily accessible to use
- be recorded in writing - that information must be easily accessible to use
- be provided in writing - that information must be easily accessible to use and the intended recipient needs to consent to receiving it electronically, eg making an application or making or lodging a claim and lodging an objection.
The legal requirements around electronic transactions apply all NZ laws except where a law has its own rules around how information is recorded, given or kept, such as making a valid will. In addition specifically listed laws are not included (such as the Electoral Act) or specific provisions in laws (such as the Passports Act).
An electronic signature can be used, where a person’s signature is needed, if the electronic signature adequately confirms the person’s approval of the information. However this doesn’t apply when the signature of a witness is required.
There are rules around when a signature or seal which need to be witnessed can be met by electronic signature. There are also rules concerning the reliability of an electronic signature. This includes that the way of creating the electronic signature is linked to and under the control of the person who signed and no one else.
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