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Articles and legal news from the Atkinson Vinden Team.

Electronic Contracts

Commercial Law, General

As more and more business is conducted online or by email it is important to be aware of potential issues surrounding the formation of a valid contract.

Both State and Commonwealth legislation allow that contracts may be formed by electronic means. Of course when you are not dealing face to face there are a number of potential issues to be aware of. We will briefly discuss three of these:

Identity:

Both State and Federal legislation hold generally that, barring agreement to the contrary, a person is only bound by an electronic communication if they actually sent it, or authorized it to be sent. Obviously this means that some form of identity confirmation is advisable, especially in important or large contracts. This could include requiring registration for online orders, or confirming an agreement by phone.

Automated Responses:

If you have an online order form which sends an automated response it should be noted that this response is capable of forming an enforceable contract, even if there has been no human interaction. If you have any concern about being able to fulfill your obligations, you should examine the wording of such a response. It may be preferable for the automated message to simply state that the order request has been received, and will be confirmed at a later date.

Invitation to Treat:

Following from the above point, it should be noted that simply placing an order online is generally not enough to form a binding contract. Until such time as the vendor accepts the order this is merely an offer to purchase or to deal, which can then be accepted by the vendor. In conjunction with the point above this makes the content of any automated response made by the vendor particularly important.

Of course, these are only some of the issues to be aware of when engaging in e-commerce. Others include the time of formation and the location of a contract.

Please do not hesitate to contact us should you require further information.