Lotu-Iiga Sam: Electronic Transactions (Contract Formation) Amendment Bill — First ReadingText is incorporated into the Bound VolumeLotu-Iiga Sam: Electronic Transactions (Contract Formation) Amendment Bill — First Reading[Sitting date: 15 May 2013. Volume:690;Page:9987. Text is incorporated into the Bound Volume.]Peseta SAM LOTU-IIGA (National—Maungakiekie): It is a privilege to speak on this bill the Electronic Transactions (Contract Formation) Amendment Bill and I want to thank the member Paul Goldsmith for bringing it into the House. He always makes thoughtful contributions both in select committee and in the House and certainly this is another example of his making a contribution to our Parliament.This bill is like its author: it is short it is sharp and it will have an impact on contract law and society in general. This bill clarifies the legal position on the time at which a contract is formed if the acceptance of the offer is sent by electronic communication. Of course contract law is one of the fundamental cornerstones of our legal system. Contracts facilitate trade and commerce as well as other business and social transactions where they are proof of the transaction having taken place for a promise to fulfil a certain obligation or set of obligations. A contract is important as it protects both parties from any surprises or changes to contracts and it helps the parties involved avoid any type of misunderstanding that may arise—and sometimes indeed contracts provide mechanisms for settling disputes that arise between parties.A contract is an agreement that has a lawful object entered into voluntarily by two or more parties. Typically each of the parties intends to create legal obligations or legal relationships between them. The elements of a contract are an offer an acceptance normally between what would be considered competent persons who have legal capacity who exchange consideration and this can come in the form of money wherethe terms of the contract between the parties must be certain. Contracts may be formed orally by paper-based writing through conduct or through electronic means.As explained in the explanatory note of this bill: “The general rule … is that a contract is formed at the time acceptance of the offer is communicated to the offeror.” We have already heard about the rule inAdams v Lindsell which created an exception for acceptances conveyed by post. Basically it stated that when an offer was accepted by post the offer was deemed to have formed from the moment the acceptance was posted and not when the contract was read by the offeror. So although the issue of whether the postal acceptance rule can be extended to electronic communications has not been considered by the courts this bill ensures that that postal rule will not apply to contracts accepted by electronic communications.I want to thank the member who has just sat down Denis O’Rourke. He alluded to a difference between the different forms of electronic communications which may create some uncertainty around this clause. I must say also that the exception that was enunciated inAdams v Lindsell really was because when the defendant wrote to the claimant in that case offering to sell some wool they asked for a reply that was “in the course of post”. So the letter which was ultimately delayed in that case was because the parties to the transaction actually required it as part of the contract to be “in the course of post”.It is my view that the established rules around acceptance must still apply and the factors that must be taken into account must be that the acceptance must be communicated to the offeree the terms of the acceptance must exactly match the terms of the offer and the agreement—as with any contract formed whether oral or written—must be certain. The general rule that the offeror must receive acceptance before a contract is accepted has been stated clearly inEntores Ltd v Miles Far East Corporation where it was held that to amount to an effective acceptance the acceptance needed to be communicated to the offeree and hence where the defendant in that particular case sent a telex as the previous speaker mentioned regarding telex messages it was—The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. His time has expired.