Young Jonathan: Electronic Transactions (Contract Formation) Amendment Bill — Third ReadingText is incorporated into the Bound VolumeYoung Jonathan: Electronic Transactions (Contract Formation) Amendment Bill — Third Reading[Sitting date: 07 May 2014. Volume:698;Page:17608. Text is incorporated into the Bound Volume.]JONATHAN YOUNG (National—New Plymouth): It is my pleasure to stand and speak on the Electronic Transactions (Contract Formation) Amendment Bill in its third reading. This might be a small bill—in fact measured by words it is very small and is crafted by such a wordsmith as Paul Goldsmith. Its size could leave us perplexed except it takes far greater acumen to say something in fewer words than it does in many. Mr Goldsmith a legislator can be proud of his accomplishment in this law. Let me givesome context to that. Creating law in such an important field of human endeavour and activity as contract law is important. Contracts are so important to the healthy development and growth of not only economies but society. They are like the sinews that hold so much together. “What is a hand without an arm?” somebody might ask. Each separately has little use or function but together they have mobility leverage and usefulness. What is a foot without a leg? What is a mouth without a mind? Perhaps some members on the other side could answer that question.But contracts are those that connect disparate parts of our economy and our society together. They socialise people. You have what I want and I have what you want—that is the nub and centre of a transaction. So let us talk and let us see if we can come to an agreement. Let us do an exchange of value.Contracts also connect countries as we know with the free-trade agreements that are benefiting our nation in these times. They are agreements that have sheltered us from the global financial crisis perhaps more than most countries. Such is the power of contracts. They are built upon international understanding and agreements that connect us for mutual benefit and that is good. They create degrees of dependency and that is OK because you look after those whom you depend upon. They create bridges of trust and respect value and inclusion.A few years ago I visited an integrated circuit manufacturer that has its factory between New Plymouth and Mount Taranaki. It makes dozens if not hundreds of components. One of the components it makes is a small integrated circuit of an onboard computer system of an F-16 Fighting Falcon made by General Dynamics for the United States Air Force. How a small North Taranaki business can supply a single part to the United States Department ofDefense baffles me but it was a contract that makes it possible.I am a space buff. I love science fiction. I always watch everyStar Trek movie that comes out and I followed the progress and development of the space shuttle. The statistics are simply mind-blowing. It is the most complex machine ever constructed with 2.5 million separate parts and 370 kilometres of wiring. Its three main engines are together more powerful than 60 Clyde Dams and the pressure of their turbo pumps can send a column of liquid hydrogen nearly 60000 feet into the sky. The space shuttle programme was supported by over 1500 active suppliers some of whom are the only known or certified source of a particular material part or service. What brings all these suppliers together all these parts together is contracts. What we are looking at tonight is a component a small component of a wider body of contract law. As every single one of those parts is important so every component part of contract law is important. Contracts are the sinews and the ligaments that bind all their collective creativity and intelligence into detailed design manufacturing and quality assurance that back with the space shuttle programme enabled them to make one of the most complex and daring machines known to man.Contracts are what grow countries. They are vitally important. They connect people and their ideas with outcomes and advancement. Any law that strengthens our contract law is not only good for business but it is good for our society. This bill is a single component of a bigger body of law known as contract law. It has a part to play in our social and economic well-being.A very important part of why this bill has come to the House is all about when a contract an electronic transaction takes place. What is the timing that is critical for that to stand its stead? That is a very important thing because we know that when it comes to disputes often timing is the issue. To have some clarity in the law about the timing of when an electronic transaction or contract takes place is clarity that is going to benefit the wider body of contract law. The example that Mr Goldsmith used was a case thatgoes back a couple of hundred years back to 1818—the case ofAdams vLindsell. It was an English contract law case regarded as the first case towards the establishment of the postal rule for acceptance of an offer. Ordinarily any form of acceptance must be communicated expressly to anofferor. However it was found that where a letter of acceptance is posted an offer is accepted “in the course of post”. When it came to an offer and an acceptance of an agreement that transacts through the post you have this period of time where it is an unknown entity of whether the offer has been accepted. Of course these days we do not do postal contracts that often. We do electronic contracts. They are the norm and increasingly will be so in our modern society.The case involved two parties in the sale of wool. On 2 September the defendants wrote to the plaintiffs offering to sell them certain fleeces of wool and requiring an answer in the course of post. The defendants misdirected the letter so that the plaintiffs did not receive it until 5 September. The plaintiffs posted their acceptance on the same day in good faith but it was not received until 9 September. Meanwhile on 8 September the defendants not having received an answer by 7 September as they had expected sold the wool to someone else. Here we have this beautiful conundrum happening. The defendants argued that there could not be a binding contract until the answer was actually received. Until then they were free to sell the wool to another buyer.The court said that if that was true it would be impossible to complete any contract through the post. If the defendants were not bound by their offer until the answer was received then the plaintiffs would not be bound until they had received word that the defendants had received the acceptance and this could go on indefinitely. Instead it must be considered that theofferors were making the offer to the plaintiffs during every moment that the letter was in the post. In essence it is like sending an email offer that when you send it is open and alive for all of that period of time. In this case it was a matter of days because the letter was misdirected and received late.Then when theofferee has placed his acceptance in the post there is what is called a fictional meeting of the minds which concludes the offer and gives effect to the acceptance. All of this had to be worked through in law 200 years ago because what was happening was that trading was starting to happen in distant places—similar of course to what we do all the time. The acceptance did not arrive in the course of post strictly speaking. All parties understood the course of post to refer to 7 September but because the delay was the fault of the defendant it was taken that the acceptance did arrive in the course of post. In conclusion this bill is about determining the time.