The Electronic Transactions (Contract Formation) Amendment Bill clarifies when electronic contracts are formed.

The Electronic Transactions (Contract Formation) Amendment Bill (the bill) confirms the law relating to acceptance of contract offers sent by electronic communications

The bill is relevant for all those who have ever made, or accepted, an offer in the form of an e-mail or any type of electronic communication. It clarifies and confirms when a contract is formed, and when acceptance of an offer is legally enforceable.

The bill confirms that, for the purposes of contract formation, an offer is deemed to be accepted by an electronic communication at thetime of receiptof the acceptance by the offeror. The position in the bill is a departure from the traditional postal acceptance rule which deems acceptance of an offer when the acceptance is posted to the offeror.

In practical terms, if you accept an offer electronically, for example by an e-mail stating "I accept the terms of that offer" this acceptance will be enforceable against you when that e-mail is received by the party making the offer - usually, but not always, instantaneously. However, as with any communication by email, if there is any question as to whether the recipient has actually received the email, it would be prudent to follow up, including by other means of communication.

The bill confirms that the postal acceptance rule (that an offer is accepted when acceptance of an offer is communicated) is redundant in situations where the acceptance is sent by electronic communication. Most lawyers have taken this to be the law after the enactment of the Electronic Transactions Act 2002, but this bill gives a legal basis for departing from the postal acceptance rule.

The bill has passed its first reading, and has been referred to the Commerce Committee. Submissions on the bill closed at the end of June and it is due to be reported back in November 2013.