Electronic Transactions (Contract Formation) Amendment Bill — In CommitteeText is incorporated into the Bound VolumeElectronic Transactions (Contract Formation) Amendment Bill — In Committee[Sitting date: 09 April 2014. Volume:697;Page:17094. Text is incorporated into the Bound Volume.]Electronic Transactions (Contract Formation) Amendment BillIn CommitteeClause 1 TitlePAUL GOLDSMITH (National):It is very kind of you to give me an opportunity to talk about the Electronic Transactions (Contract Formation) Amendment Bill which I have brought to Parliament. We are dealing first with clause 1 which is the title. The Act is the Electronic Transactions (Contract Formation) Amendment Act 2012—Hon Ruth Dyson: I think it’s “bill”.PAUL GOLDSMITH: —bill. Yes thank you very much. I thought we could just have some opening remarks about contract formation and why that is an important area of the law.Most important people need to know that their contracts will be honoured in life and in business. That is a very important function of the law. Clear and predictable laws governing commerce are some of the foundations of our successful society and are part of the foundation of a successful economy. The fundamentals of business have not changed over the years in that trading is among the most natural activities of humanity. It is a civilising activity at bottom because it is about making an arrangement from which both parties will benefit. People make deals only if both of the parties will flourish. So most of all trade flourishes when there is a shared understanding of the rules. I trust that this bill will go some way to add to that shared understanding which is so important in contract law. Clarity and certainty lead to confidence and confidence leads to greater investment. Investments lead to jobs employment and economic growth which drive the economy so that we can afford quality health-care decent education support for the vulnerable—all those sorts of things that this Government supports.In my first reading speech on this bill I said that this bill may not on its own “bring about the brighter future to which we all aspire and to which this Government is so committed but it is a small and useful addition to the latter’s work.”Moana Mackey: You’re halfway there.PAUL GOLDSMITH: Thank you. So this bill tidies up one small area of uncertainty and will go some way to increase the flow of business. Given the prevalence of electronic communications in society today including emails smartphones social media Twitter and all those things it is useful that the current Act be amended to cover such areas.I confess that I am not a lawyer. In fact I actually started off studying a law degree at the University of Auckland but found it was not to my taste so rather indulgently—and now I cannot believe that I did it—I turned down my place in the law school at Auckland University and decided to do a Bachelor of Arts in history.Hon Todd McClay: The rest is history.PAUL GOLDSMITH: The rest as they say is history—that is right. So I did not get to study law but funnily enough here we are in the Committee of the whole House embroiled in the details of law.I wonder whether I could take just a little bit of time in this opening address to bring out some of the details and the origins of the bill that we have got before us. In essence it is about bringing clarity to the question of electronic transactions hence the title the Electronic Transactions (Contract Formation) Amendment Bill. In essence the bill clarifies a point of contract law that is currently vague. Its purpose is simply to clarify the legal position on the time at which a contract is formed if the acceptance of the offer is sent by some form of electronic communication. The bill recognises the need for contractual transactions to join the electronic age.The general rule of contract formation is that a contract is formed at the time at which acceptance of the offer is communicated to the offeror. So when somebody says: “Yes I accept the offer.” or the offeror and the acceptor shake hands then a contract is formed. However an exception to that rule was created for acceptances created by mail. This goes back to a famous case that we heard about in some of the early addresses Adams v Lindsell in 1818. I might trespass just a little bit to go into the details to explain the case.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 the post. The defendants however misdirected the letter so that the plaintiffs did not receive it until 5 September.Scott Simpson: Fleeced.PAUL GOLDSMITH: No no—they were not fleeced. They were trying to buy a fleece. The plaintiffs posted their acceptance on the same day but it was not received until 9 September. Meantime on 8 September the defendants not having received an answer by 7 September as they had expected sold the wool to somebody else hence the case. The defendants argued that there could not be a binding contract until the answer was actually received and that until then they were free to sell the wool to another buyer. The judge however said that if that was true it would be impossible to complete any contract through the post because if the defendants were not bound by their offer until the answer was received the plaintiffs would not be bound until they had received word that the defendants had received their acceptance and this could go on indefinitely.Instead it must be considered that the offerors were making the offer to the plaintiffs during every moment that the letter was in the post. So when the offeree had placed their acceptance in the post there is a fictional meeting of minds that concludes that the offer gives effect to the acceptance. This was tidied further into what was now referred to as the postal acceptance rule in the 1892 case Henthorn v Fraser—and I will not go into the details of that right now—where the court determined the precise timing of acceptance and that was the moment when the letter of acceptance was posted.The longstanding rule as to postal acceptances in Adams v Lindsell is not appropriate I contend for electronic communications. This has already been recognised by the courts in relation to acceptance of contractual offers by telex as far back as 1955 in Entores Ltd v Miles Far East Corporation which treated the communication as being—as with a telephone communication—simultaneous. The facts in the Entores Ltd case involved a London-based trading company that sent an offer by telex for the purchase of copper cathodes from a company based in Amsterdam. So there is no clear case authority on acceptance by email.I am very grateful to members right across the House because in the second reading I think we had unanimous support for this bill. I am very grateful to members on all sides of the House for their support on this bill and I hope we can continue in that spirit of bipartisanship as we go through the rest of the debate this evening.This bill provides an appropriate way to deal with email acceptances by providing that an offer that can be accepted by electronic communication is deemed to be accepted at the time of receipt by the offeror—that is when it arrives at the offeror’s in-box. As we go into further consideration of this bill in the later clauses we can look at some of the intricacies and nuances around arrival times and the definition of receipt which is an area of great discussion. That will hold for a few minutes.I gave consideration to other potential names. The “Email (Contract Formation) Bill” might have been one but that does not cover the full gamut of potential electronic transactions that could be dealt with by this legislation. The “Text Email and Other Electronic Transactions (Contract Formation) Bill” could have done it or the one that I thought probably covered it in most detail would have been to call it the “Electronic Transactions (Clarifying the Moment When a Contract Is Formed When Sent by Electronic Means) Amendment Bill” but I felt that that might have been too wordy. That might not be the first time that I have been accused of being too wordy and I did not want that reputation to extend. So on that basis I was hoping that—Hon CHRIS TREMAIN (National—Napier):It is a pleasure to take part in the Committee stage of the Electronic Transactions (Contract Formation) Amendment Bill and it is particularly important as we approach or get into the guts of clause 1 of this bill which deals with the title of the bill one that I have actually just mentioned.It has had me pondering actually—the title of this bill—because tonight we have learnt that the member in the chair Paul Goldsmith has a BA in history and obviously did many English papers is a linguist one with much ability in the spoken and written word and is an astute and intelligent man. So I think it is our duty tonight to challenge the member in the chair as to the title of this bill and as to whether he has actually got the nub—the true essence—of the title accurate.We will be considering a range of different names for the title of this bill this evening and asking the gentleman in the chair Mr Paul Goldsmith to respond to these titles and to give us a sense of whether we have actually got the nub of the title correct tonight because what is really important is that this bill will go down in history. It will go down in history as the first bill that the member Paul Goldsmith has taken fully through this House and that is not a small matter. There are members in this Chamber who have come here year in year out and have never been able to climb those lofty heights of taking a bill from its formation through the period. I am one of those members apart from as a Minister where I was able to achieve that but a member’s bill is something that very few people are able to climb the heights to. As a result of that the title is actually very important because it will go down in history. And given that the member in the chair has a BA in history it is critical that we focus on it in some detail.So the question I have tonight is about the current name the Electronic Transactions (Contract Formation) Amendment Bill because the bill is very much focused on enabling electronic contracts in the modern world. One of the key pieces of Government policy that has been worked on recently has been the Government ICT Strategy and Action Plan to 2017. I am wondering whether the member in the chair gave much consideration to linking the title of this bill to the Government ICT Strategy and Action Plan to 2017 to ensure that it captured the nub of the strategies in this particular strategic document so that when we get to clause 5 which is actually the heart of this bill we will be sure that we have actually captured that correctly in the title.Key to that strategy is actually result 10 which many members out there in the community will have heard of. Result 10 was one of the Prime Minister’s key statements when we commenced this term of Government and it was that by 2017 an average of 70 percent of New Zealand’s most common transactions electronic transactions—Kanwaljit Singh Bakshi: Pardon?Hon CHRIS TREMAIN: By 2017 an average of 70 percent of New Zealand’s most common transactions with the Government will be completed in a digital environment. This bill goes to the heart of that. So my question to the member in the chair with his BA in history and English is whether he gave strong consideration to the title.Moana Mackey: What’s a BA in history got to do with it?Hon CHRIS TREMAIN: Well he also did English papers as well and has written many books over his time so I am just suggesting he is a linguist of note. Did he give consideration to the strategy in his consideration of the title before us tonight? That is my question for the member. Thank you.DENIS O’ROURKE (NZ First):New Zealand First will continue to support the Electronic Transactions (Contract Formation) Amendment Bill—a very grand title indeed. The bill clarifies one small area of uncertainty and would assist business. Given the prevalence of electronic communications in society today including email smartphones and social media it is useful that the current Act be amended in the way now set out in the bill as amended by the Commerce Committee. But it is a little sad that such a simple bill as introduced had to undergo so much amendment. The member concerned clearly did not do his homework well enough. But the bill as introduced has now been saved and is worth enacting.Having said that the bill is probably not needed at all because the general rule of contract formation is that a contract is formed at the time an acceptance of the offer is communicated to the offeror—that is when acceptance is received. This applies generally unless there is an established exception. There is no such exception for electronic transactions such as emails. There is as the member himself said an exception for acceptances by post established by the rule in Adams v Lindsell so that the date and time of acceptance is when the letter is posted not when it is received. The longstanding rule in Adams v Lindsell is not appropriate for electronic transactions. Contractual offers by telex as with the telephone are simultaneous so a contract is formed when the offeree accepts and that is settled law.Although it is correct that there is no clear authority on acceptance by way of email there is no established exception either so the general rule applies in favour of acceptance when it is received. This is effectively at the same time as when it is sent if sent by electronic means such as email. So this bill is not really needed because the general rule relating to acceptances would apply but the bill will serve to confirm and clarify the law.I support the select committee’s amendment of the bill to confirm that the contracting parties can decide for themselves when and how acceptance will occur. That again is no real change because that has always been open for contracting parties to do. The provision in the bill for acceptance as at the time of receipt will be the default position and that is consistent with the law as it now is.So although this bill clarifies one small area of the law of contract it has hardly really been worth the time and effort and hopefully the member who introduced it can think of something more worthy of our time for his next member’s bill.KANWALJIT SINGH BAKSHI (National):Thank you Mr Chair for the opportunity to speak in the Committee stage of the Electronic Transactions (Contract Formation) Amendment Bill. I will start with congratulating my learned colleague Paul Goldsmith on introducing this bill. As my friend the Hon Chris Tremain mentioned he will be remembered in this Parliament for introducing this bill. There are very few members who get a bill drawn from the ballot in their first term and I was one of those whose bill was drawn from the—Scott Simpson: What was your bill?KANWALJIT SINGH BAKSHI: My bill was the Military Manoeuvres Act Repeal Bill.Iain Lees-Galloway: That was a stunner.KANWALJIT SINGH BAKSHI: Yes that was a stunner. That bill had unanimous support from those members who are talking about this. That was a fantastic bill which I introduced and which was drawn on the very day that I dropped it into the ballot and it was unanimously supported.Hon Chris Tremain: I raise a point of order Mr Chairperson. I seek the leave of the Committee to give the honourable member just a few minutes to reflect more widely on the Military Manoeuvres Act Repeal Bill just so we can understand—The CHAIRPERSON (Eric Roy): I am not going to put the leave. That is out of order.KANWALJIT SINGH BAKSHI: Coming back to this bill once again I congratulate Mr Paul Goldsmith. As he mentioned in his introductory remarks he wanted to do law—luckily he did not do it but he did other things. Otherwise there would have been more bills in the ballot. We are debating clause 1 which is the title of the bill. I have got a question for Paul Goldsmith: did he consider giving other names to this bill? For example it could have been the “Waiver of the Postal Acceptance Rule in Relation to the Electronic Transactions (Contract Formation) Amendment Bill”. I would like to know from the member what considerations were given when he gave this bill the name that he has given it. So with these words I conclude my contribution on the first clause and will be back on the second clause.MOANA MACKEY (Labour):I move That the question be now put.MARK MITCHELL (National—Rodney):I would just like to reiterate the comments made by my colleagues and congratulate Mr Paul Goldsmith the chair of the Finance and Expenditure Committee on bringing the Electronic Transactions (Contract Formation) Amendment Bill. I would like to just reiterate the comments made by my colleague the Hon Chris Tremain in that we would like to test this little bill through the Committee stage. I think he asked a very fair question around whether or not Paul Goldsmith has got the title of the bill right because we are talking about the title of the bill. I notice that Ms Mackey has got a fair bit to say and I see that she is going to take a call. I am very pleased about that. I would like to see the Opposition taking some calls on this bill tonight.If you could bear with me just for a moment please I would just like to reflect on a bill that I was given the stewardship of which was the Prohibition of Gang Insignia in Government Premises Bill.Hon Member: Oh that was a good bill.MARK MITCHELL: It was. I was very fortunate to be given the opportunity by the Hon Todd McClay who actually brought that bill to the House—The CHAIRPERSON (Eric Roy): Come back to the bill.MARK MITCHELL: Yes I will Mr Chair. I was very fortunate that when he was promoted to become a Minister he entrusted me with that bill and it was a real honour to bring it through the House.Iain Lees-Galloway: I raise a point of order Mr Chairperson. This is the Committee stage; this needs to be relevant to the bill.The CHAIRPERSON (Eric Roy): Yes I know. I have indicated to the member that he should debate clause 1.MARK MITCHELL: I was actually just about to point out that of course Louisa Wall who is here tonight has also had some great successes in this House in bringing some bills through the House. It is a bit disturbing to me that one of her own colleagues would take a point of order when we are trying to congratulate and acknowledge her great efforts in the House.But coming back to the bill and the title of the bill the Electronic Transactions (Contract Formation) Amendment Bill I would again just like to reiterate and support the comments made by my colleague the Hon Chris Tremain and I would encourage the member in the chair Paul Goldsmith to take a call and speak to us just a little bit about the title of the bill. He highlighted the fact that he has obviously got some very strong qualifications and a background in history and English and it would be very interesting for the Committee to hear how he actually came to develop what appears to be a very succinct and very good title for this bill.I was a little bit disappointed by Mr O’Rourke’s contribution when he referred to the bill as a simple bill. It is not a simple bill. It is actually a very important bill because it safeguards people’s rights in terms of when they are making an electronic transaction. Of course the world has changed so much that a lot of our transactions now are electronic so I was a bit disappointed—Iain Lees-Galloway: He hasn’t made a single point yet.MARK MITCHELL: Well I am looking forward to Mr Lees-Galloway taking a call and making his contribution to the debate tonight as well.Hon Member: Will he talk about the title do you think?MARK MITCHELL: I do not know; let us see. But I would just like to finish by saying again that it is a very good bill and I will be very happy to take calls on clauses 2 3 4 and 5.Hon Member: What was the name again? Tell us the title.MARK MITCHELL: The title again is the Electronic Transactions (Contract Formation) Amendment Bill. Thank you.Hon RUTH DYSON (Labour—Port Hills):I move That the question be now put.A party votewas called for on the questionThat the question be now put.Ayes57New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan.Noes64New Zealand National 59; Māori Party 3; ACT New Zealand 1; United Future 1.Motion not agreed to.Hon TODD McCLAY (Minister of Revenue):I was worried for a moment there that I would not have an opportunity to speak on the title of this bill the Electronic Transactions (Contract Formation) Amendment Bill. Before I do I want to congratulate the mover of the bill Paul Goldsmith on an excellent piece of work. Members opposite have been a bit flippant about this legislation and the importance of it but I can honestly say when looking at the title anybody sitting at home at the moment watching their television who has entered into an electronic transaction and who is concerned about whether the contract has been formed or not will now be reliably informed that Mr Goldsmith has their best interests at heart. I congratulate him on that.Others in this debate so far have spoken about bills that have come before the House from members and the titles of those bills. Some of the members of the Opposition have not seen the relevance of that as far as this debate is concerned. Well I would argue that it is relevant because if you get the title of a bill wrong it can give the wrong impression as to exactly what it is the member is trying to achieve. There have been many examples of this—of very well-meaning bills that have fallen on the steps of this Parliament because they have not gained the votes or support that they needed because members often from the Opposition have not understood the importance of them the import or what they are trying to achieve because the title has not been done correctly.In the case of Mr Goldsmith who—we have heard from him firsthand—so narrowly avoided becoming a lawyer and instead decided to look backwards in history so that he could learn from the mistakes of others and could therefore come forward with a bill with a title that is about the future not about the past he has put great depth and detail into this. So the bill is the Electronic Transactions (Contract Formation) Amendment Bill 2012.The member responsible for the bill spoke eloquently at the beginning of the debate but he has not answered the questions that have been posed. The question I have—in fact I have many questions for him but in this case the first question is: when he decided to name this the Electronic Transactions (Contract Formation) Amendment Bill why “contract formation”? It could just be the “Electronic Transactions Amendment Bill 2012” and that would be enough. But there would be people out there who have unknowingly and unwittingly entered into contracts as a result of an electronic transaction not knowing they have done so and therefore there would be obligations imposed upon them one assumes. Is that the reason he has decided to include “contract formation” in the title? There will be people who have wanted to enter into contracts I am sure and were not sure that they were able to do so when they entered into that electronic transaction.This is quite a weighty piece of legislation. Although on the surface of it that may not be clear it will touch many New Zealanders’ lives. For those who have had issues in the past around contracts and contract law and for those who maybe did not narrowly avoid the obstacles that would have been placed in the way of Mr Goldsmith—those who continued on to study law—they know how detailed how complex and how very very difficult contract law can be anywhere in the world particularly in New Zealand. So I am very interested to hear from him about exactly why he decided this should be the title.I would say it is so very important because this is my sixth year I have been in Parliament now and I do remember many many opportunities and many occasions when the Opposition has kept us here talking late into the night about whether or not the title of a bill should be changed. Actually it was enjoyable and it is one of the great things about this Parliament. When the Government has an important piece of business to do we do not mind sitting aside and letting others who do not want there to be any question—whether or not they are intelligent—and who are happy to stand up on the other side the Opposition members and decide to get rid of any doubt at all by going on and on about things that they think the Government has not got right.In this instance I guarantee that any moment now a member from the Opposition will decide that actually Mr Goldsmith has not done his job properly he has not thought this bill through properly and it is going to do things other than those suggested in the title and they will come forward with a swathe of Supplementary Order Papers during the Committee stage to make changes. That is why we have to decide whether or not it is right and whether Mr Goldsmith has got this right. For my part I think from my reading of the bill—and I spent quite a bit of time looking over it before deciding to make an intervention—he has it about balanced. [Bell rung] Mr Chair?The CHAIRPERSON (Eric Roy): I call the Hon Todd McClay.Hon TODD McCLAY: I was going to conclude but one other thought came to mind so I will continue for a moment and I thank you for giving me the opportunity for this. So in reading this bill and spending quite some time looking at it part by part—Kris Faafoi: How sad are you?Hon TODD McCLAY: Well the member has asked how sad I am. I have got to tell you looking at what has happened in the polls I am not as sad as the members opposite. I have got to tell you that if my party was at 29 percent in the polls I would not have that grin on my face. I would be focusing on this legislation. The reason there are differences in the way the different parties in this Chamber are polling at the moment is that some members on this side of the Chamber come here to make a difference to New Zealanders. Paul Goldsmith with this bill is one of those members. He is one of those people who want to make a difference in the lives of New Zealanders. He has worked so very hard in the last 3 years that he has been in this Parliament. This piece of legislation is merely one part of the hard work that he has done over the last 3 years that he has been here.This title will send a very clear message to New Zealanders about what he is deciding to do on their behalf so that they can be more comfortable in their commercial lives in their private lives when they are engaged with the internet when they are working with their banks and when they are looking at their electronic transactions of very many different types the contractual obligations they have and exactly how those contracts are formed. So this will be called the Electronic Transactions (Contract Formation) Amendment Act 2012. I think this is an excellent piece of legislation. I think Mr Goldsmith has done a very important piece of work here. I very much look forward to taking many many many more calls when we get into some of the substance of this because it will be so very important that we have clear understanding.One of the challenges you have is that in the case that members opposite do not fully understand the intricate detail of the bill that Mr Goldsmith has brought before the Committee it may be that we need to consider a change to the title. That is why this Parliament has decided that any member may take the floor to talk about the title of the bill so we can make sure that we get it right. In the case of what Mr Goldsmith has done here if it was not correct one day in the future when his great-great-grandchildren—because he is a great family man from Epsom—look at the sterling work he did here they may see only the title. They would not fully appreciate the many many hours of detailed study and work he put into formulating this idea into the research to draw up the bill and then into going to all parts of this Parliament to lobby them to get their support so that he could put it into law. They may think actually with a title that was not well-thought-up that this was a trivial piece of legislation.But indeed as I have said earlier I think he has the balance about right at least in my simplistic understanding of this legislation. Those in the future who may look at only the title and not take the time to read the great detail of this bill should it become an Act will see that it is a piece of work with great gravity and that he is a man with gravitas. So can I again thank him for bringing this to the Committee and congratulate him on so very narrowly avoiding the direction he could have fallen in moving towards a career in law. Had he become a lawyer I am sure there would have been many many more words in this bill but I am not sure so much would have been added to it. So if he could address my question about exactly why he decided that this was the title that this bill should have I would be eternally grateful.Scott Simpson: What is the title?Hon TODD McCLAY: The title of this legislation will be the “Electronic Transactions (Contract Formation) Amendment Act 2012”. Thank you.SUE MORONEY (Senior Whip—Labour):I move That the Committee report progress.A party votewas called for on the questionThat the Committee report progress.Ayes60New Zealand Labour 34; Green Party 14; New Zealand First 7; Māori Party 3; Mana 1; Independent: Horan.Noes61New Zealand National 59; ACT New Zealand 1; United Future 1.Motion not agreed to.Dr JIAN YANG (National):I appreciate the contributions of my colleagues. They have argued very eloquently the necessity of my colleague Paul Goldsmith explaining why he used this title the Electronic Transactions (Contract Formation) Amendment Bill. I actually have a PhD but in international relations. I always admire those who understand electronics so I would appreciate it if he could explain exactly why he used this title and give further explanation. It is important because this bill is itself particularly important. Of course you can say it is simple it is straightforward but none the less it is particularly important.I want to re-emphasise the importance of this bill simply because the internet industry has become so important to our economy. I will emphasise some statistics that I have used in the past. Businesses and consumers are now living in the internet age and our legislation needs to keep up with changing technology to ensure that we have constituency. The internet has already impacted the economy in a range of ways such as investment in internet-related infrastructure.In 2009 Statistics New Zealand—and this is very important—valued the net capital stock held in the telecommunications internet and library services industry at $14.7 billion or 2.6 percent of total New Zealand capital stock. Since then the Government has agreed to invest $1.65 billion in the ultra-fast broadband roll-out through to 2019.In 2009 the internet service industry contributed $4.2 billion or 2.3 percent of GDP. Also I would emphasise that the Boston Consulting Group estimated in 2012 that broadband would deliver $32.8 billion in benefits to New Zealand end-users over the next 20 years. Also more important the New Zealand Institute of Economic Research completed a report on the role of the internet in the New Zealand economy in 2012. The report emphasises that “economists see the institutions ‘rules of the game’ such as the legal status of different types of transactions in an economy as vital determinants to the way it functions.” The structures and frameworks must suit—match and support—the types of economic activities that are taking place. So the wider rules of society such as laws enforcement provisions and other policies and oversight of the internet play a role in determining its effect on the level of structural change for innovation in an economy. This suggests that for the internet to maximise its impact complementary policy and institutional settings need to be correctly set and kept up to date. So this is my quotation.Basically I would emphasise again the importance of the bill simply because it is so crucial to our economy. As I said I was educated in international relations but I really admire those who are good at electronics. So I admire my colleague Paul Goldsmith who has drafted this particular bill. It is particularly important and I would appreciate his explanation regarding the title itself. Thanks.PAUL GOLDSMITH (National):I have been a little surprised by the extent of probing questions I have had from my side of the Chamber on my ability to accurately describe this bill the Electronic Transactions (Contract Formation) Amendment Bill in its title but I had given some thought. I mean it could conceivably have just been the “Electronic Transactions Amendment Bill” but what I wanted to achieve by adding the words “Contract Formation” was to draw people’s attention to that part of the bill that is about trying to give clarity.I did note a certain snide element to one or two of the speeches from the other side particularly from New Zealand First implying that this was a minor bill but there can be no more important task in my opinion than to ensure that the rule of law in contracts is effective and operational in this country. We are living in very dynamic times where the mode of communications is changing rapidly. We want to make sure that business people and individuals have a measure of clarity when they are trying to transact their business. At the moment there is that lack of clarity and that is why I have chosen the title Electronic Transactions (Contract Formation) Amendment Bill for this bill. I did consider “Waiver of the Postal Acceptance Bill” which was proposed by Kanwaljit Bakshi my colleague but I think that it is important because it amends the Electronic Transactions Act that we included that in the title otherwise people would be confused as to which piece of legislation it was amending. So that is where I fell on this one.I do not think we need to add any more but I do not think we measure the importance of the contribution that a piece of legislation brings to the economy and to the country by the number of pages it has. I would describe this bill as small but perfectly formed. Thank you.Clause 1 agreed to.Clause 2 CommencementPAUL GOLDSMITH (National):This clause 2 relates to the commencement of the bill and it says that the Act will—Hon Clayton Cosgrove: You obviously got briefed on this one.Kris Faafoi: Get on with it then son.PAUL GOLDSMITH: Well when you give me the courtesy of some quiet I will continue. It says: “This Act comes into force on the day after the date on which it receives the Royal assent.” I suppose the first point I would make is in reference to Royal assent. It is important to pay tribute to the Duke and the Duchess who are here in New Zealand with young Prince George. I am sure there is no question that all of us here in this Chamber hope that they had an enjoyable time with the Plunket kids and no doubt are relaxing and turning to this broadcast. We welcome them to New Zealand. Many arrangements have been made in the course of their visit through electronic transactions no doubt contracted over the internet in the age that we live in. It is interesting to contrast that with the Duke’s grandmother when she first came—1953—when most of the details would have been managed by letters.In terms of the commencement I am suggesting that the Act comes into force a day after the date on which it receives the Royal assent. The important point here is that I am not suggesting and have not suggested—and I will not accept any suggestion from anybody else that I have suggested it—that this would be a retrospective Act or come into effect retrospectively because I do not agree with retrospective legislation unless it is in the most extreme cases. It is such a sound principle that people should have certainty as much as possible about the laws under which they are to operate. From certainty comes predictability comes confidence and comes investment. So I have no truck with those who would argue that this bill should be introduced retrospectively. I think it should definitely come into force only on the day after it is signed and should not be applied by going back at any point.By the same token though I also do not think that there is any argument for—but I considered it at great length—whether we should delay the introduction of this bill or the commencement of it in terms of it coming into force say 1 year out after it had received the Royal assent because there was some thought given as to whether we needed to give the business community the opportunity to prepare for this change in legislation.Moana Mackey: This doesn’t do anything.PAUL GOLDSMITH: Well it is a very legitimate question to ask. You do not want to ram change through too soon. But my conclusion after thinking about this was that this legislation cannot come soon enough because at the moment we are in a period of uncertainty. At the moment we are not sure exactly when an offer is accepted when it is received by means of electronic communication. Is it when he or she receives the email or when it is in their in-box or when they open it up or when it arrives in the server if there is a gap before its arrival in the server? Similarly for text messages and other messages. So it may well be that it is best to include a definition of “receipt”. These were the sorts of circumstances that we were considering amending in the bill.Hon Clayton Cosgrove: Is this the commencement?PAUL GOLDSMITH: Yes but the point I am trying to make Mr Cosgrove is that I do not think it makes sense to delay the introduction of this for a year given the fact we had an episode in February this year when Telecom cancelled the passwords of more than 60000 Yahoo!Xtra email accounts that were believed to have been compromised following a cyber-attack. So we have to be cognisant of the fact that people were not able to access their accounts for several days in that instance and that was just one instance; I could refer to many others. Presumably the emails had arrived in the server but they were not available.So it is that area of uncertainty that this legislation is hoping to resolve and that is why in my view it does not make sense to hold off for a year but rather it makes sense to focus on bringing it in the day after the Royal assent.I did give some thought as to whether or not it would be appropriate to have the Act come into force on 20 September. I did give some thought as to whether it should commence on 20 September but the thinking was that this could be a point of change or it could be a point of continuity. So after a while I thought well 20 September is an election day and there will be a lot going on there. It would not necessarily make sense to have the Act starting on 20 September but then another opportunity I thought might have been 15 January but—Moana Mackey: Are you going to go through every date in the calendar?PAUL GOLDSMITH: No I was not but if you would like me to I could. But the problem with 15—[Interruption] The problem with 15—[Interruption] Mr Chair?The CHAIRPERSON (H V Ross Robertson): They are being rather noisy are they not?PAUL GOLDSMITH: I am trying to concentrate. I am afraid I have lost my place. I might have to go back. It is a question of retrospective legislation. I do not agree with that as a general principle. What I wanted to say is that I had considered it commencing the day after the Royal assent and that is where we have fallen down at the moment. I would just be interested in the views of the rest of the Committee. Thank you.Hon CHRIS TREMAIN (National—Napier):It is a pleasure once again to speak in this part of the Committee stage on the Electronic Transactions (Contract Formation) Amendment Bill now that we are on to clause 2 the commencement clause which is a very exciting part of the bill actually.Hon Clayton Cosgrove: The gritty part.Hon CHRIS TREMAIN: It is actually gritty yes—one of those parts of the bill that you want to get down and really understand in some depth. I know Mr Cosgrove is very focused on this part of the bill. He is a details man. He is a details man. I know that from the work I have been doing with him on the Commerce Committee. He gets into those reports—particularly minority reports. There may in fact be an opportunity tonight Mr Cosgrove to put in a minority report on the commencement clause the second clause of this bill.Kris Faafoi: Don’t start us.Hon CHRIS TREMAIN: Do not start you? Well I am happy to sit down and give you the opportunity to do that Mr Cosgrove.KRIS FAAFOI (Labour—Mana):I move That the question be now put.Hon CHRIS TREMAIN (National—Napier):My challenge clearly was not taken up by Opposition members which is unfortunate but we gave them the chance. Perhaps tomorrow in the select committees—Hon Clayton Cosgrove: Oh yes! Same time same place.Hon CHRIS TREMAIN: —when you have that opportunity again you may choose to sit out on that one Mr Cosgrove but possibly not.The commencement date is really important because it is actually the commencement of another part of the great National Government plan to actually take this country forward. In fact if you think of the four key parts of that plan it is firstly to get the country back into surplus and we are doing that. We are doing that very well. Secondly it is to build a more competitive and productive economy. Well this bill the Electronic Transactions (Contract Formation) Amendment Bill and the commencement date go to the heart of that particular focus of building a more competitive and productive economy. The urgency of getting this bill across the line once it has obviously had the appropriate debate that is needed in this Chamber is very important.Do not forget the third part Better Public Services which we continue to do on a day-by-day basis in this Chamber. The public is now coming up to me and saying “Minister Tremain”—ex-Minister—“the services that we are seeing from our Government sector are absolutely fantastic.”Hon Clayton Cosgrove: Relevance?Hon CHRIS TREMAIN: Do not forget Mr Cosgrove the fourth part of that plan. It is very relevant to your electorate down in the south there rebuilding that beautiful city of Christchurch—that beautiful city of Christchurch.Coming back to that commencement date which is critical and specifically to the second part of that wider Government plan for the economy of building a more competitive economy one of the key parts of that as I spoke about earlier is the information and communications technology strategy and action plan.Iain Lees-Galloway: I raise a point of order Mr Chairperson. The member has strayed a long way from the commencement clause. In the Committee stage he needs to keep his comments directly to the clause we are debating.The CHAIRPERSON (H V Ross Robertson): Actually he does. I have been listening and I have to say that less than 15 seconds ago he actually mentioned the commencement date. But I would ask the member to try to focus on the date.Hon CHRIS TREMAIN: Thank you Mr Chair particularly for listening so intently to the points that I was making. What I was getting to and continuing to focus on was that commencement date and the urgency of it once we have had the appropriate debate that needs to happen in this Chamber tonight and possibly over more weeks to get this bill through.What I was really focused on though were the other strategies that we are rolling out particularly in the computing and information and communications technology sector. I want to turn particularly in this regard to other commencement dates in regard to services that are digital by default because these also are other strategies that we are rolling out in conjunction with the Electronic Transactions (Contract Formation) Amendment Bill. In clause 2 “Commencement” it states the Act comes into force on the day after the date on which it receives the Royal assent. Well these other strategies also have some level of urgency to them as well. If the Committee would like I can go through some of those strategies in some detail. Perhaps the member in the chair Paul Goldsmith could comment on some of these strategies and the relevance of the information and communications technology strategic plan and the commencement date in this bill and how the two wider strategies relate. Yes I agree this is not a silver bullet to taking the economy forward but it is one of the small parts so the urgency of the commencement date is very important.I will leave it at that at this point in time. It is up to one of the other members to expand on the commencement date and the importance of the urgency that we are attributing to it this evening. Thank you.GRANT ROBERTSON (Labour—Wellington Central):I move That the question be now put.The CHAIRPERSON (H V Ross Robertson): No I am going to call the honourable member Kanwaljit Singh Bakshi.KANWALJIT SINGH BAKSHI (National):Thank you Mr Chair—that is a very wise call. We are debating the second clause of the Electronic Transactions (Contract Formation) Amendment Bill. It is a fantastic bill introduced by my good friend Paul Goldsmith. As has been mentioned he will be remembered for this bill.Hon Clayton Cosgrove: Yes he certainly will. He certainly will be remembered.KANWALJIT SINGH BAKSHI: Yes he will be remembered. He has done a lot of work and is continuing to do so. He is a very good chair of the Finance and Expenditure Committee.This bill has got clause 2 which states that the Act commences on the day after the date on which it gets the Royal assent. I would like to ask the member in the chair why he decided on having that Royal assent date because he mentioned that he had considered making it 1 year after the commencement date. Why not 2 years? It is important that people should understand this important bill.Hon Clayton Cosgrove: Do you understand it?KANWALJIT SINGH BAKSHI: Yes I have understood it. Do not worry about it Mr Cosgrove.Hon Clayton Cosgrove: I’m not.KANWALJIT SINGH BAKSHI: Yeah? We will see to it. I would like to mention that the member from New Zealand First said that it is a simple bill. Every contract is very important and has very detailed clauses in it. It is not a simple bill. It has got many clauses. We need to understand how the contract has been formed and what clauses are there. With this we need to understand and I ask the member why he considered that once the Royal assent is received it commences on the day after that date. Why not later on? With these words I conclude my contribution.IAIN LEES-GALLOWAY (Labour—Palmerston North):I move That the question be now put.MARK MITCHELL (National—Rodney):I am very happy to take a call on the second clause the commencement clause in what is a very good bill the Electronic Transactions (Contract Formation) Amendment Bill brought to this House by my colleague Paul Goldsmith. He made a very good explanation around the title and I now clearly understand why we have the words “contract formation” in there. It is really the heart of the bill.The commencement date is very important in this bill. Mr Goldsmith has already indicated very clearly that he wants the commencement date to be the date after it receives the Royal assent. I support this position completely. It was interesting because I guess I did have a question around whether or not this should be retrospective legislation and the member made it very clear that he has decided that he does not want it to be retrospective. In fact as he said he is a member of this House who is not in favour generally of retrospective legislation for his own very good reasons. In actual fact this bill probably does not lend itself to being retrospective in nature.This is a very good bill and I think that Paul Goldsmith made a very good point which is that there is a sense that we do live in an electronic age now. He sort of went back in time and said that once upon a time a contract was formed through the preparation the mailing and the receiving of a letter. The contract was formed when it was put into the envelope the stamp was put on it and it was put in the mail—that was when the contract was formed. It was very clear. The reason why I mention this is that it relates directly to the commencement date and to why the member is pushing very hard for a commencement date that will be the day after the bill receives the Royal assent. But now in the modern age—hello Barbara—we live in an entirely different era where electronic transactions—Carol Beaumont: The member is better than this.MARK MITCHELL: —are a part of daily life. I would invite Ms Beaumont to take a call so we can actually hear what the Opposition feels about this bill.Hon Clayton Cosgrove: No no we’re listening to you.MARK MITCHELL: I would be very interested to hear that and I am sure that there would be an amazing contribution from Mr Cosgrove. I invite him to take a call as well.In these modern times a lot of our transactions are electronic and I think Mr Goldsmith raises a very good point. It comes to the heart of this bill and it comes to the reason why the commencement date is so important. I keep coming back to the fact that the member in the chair has highlighted the day after the Royal assent is given and I fully support that bit. But the thing is that now in these electronic times he is quite right to ask when the contract is formed. Is it when an email arrives in the server when the email arrives in your in-box or when you open the email? There does have to be certainty and there does have to be clarity around this. I come back—Carol Beaumont: Commencement.MARK MITCHELL: Well the commencement date is critical.Hon Todd McClay: No no but the contract forms when it commences—like the commencement date.MARK MITCHELL: That is right. The contract does form on the commencement—you are absolutely right. We keep coming back to it and we keep highlighting it but listen I think it is very important to continue to highlight that Mr Goldsmith has stated very clearly that he wishes the commencement date to be from the day that the bill receives the Royal assent.I would like to come back to a comment that my colleague the Hon Chris Tremain made because he made some very very good observations. When we are talking about transactions it actually does come to the heart of our economic growth does it not? There are thousands of transactions being made every day in this country.Hon Clayton Cosgrove: Really? Is that right?MARK MITCHELL: Yes that is right Mr Cosgrove. I know that you might be a little bit disconnected from what is happening in the country but actually there are thousands of transactions happening every day. So finally I would just like to come back and finally state and support Mr Goldsmith’s comments and statements around his preferred commencement date—that is the day after this bill receives the Royal assent. Thank you.Clause 2 agreed to.Clause 3 Principal ActPAUL GOLDSMITH (National):Now we come to clause 3 of the Electronic Transactions (Contract Formation) Amendment Bill which relates to the principal Act. It says: “This Act amends the Electronic Transactions Act 2002 (the principal Act).” If we look at the details of the Electronic Transactions Act 2002 which was brought through this House by the Hon Paul Swain—and I would like to pay tribute to him. I used to play with him in the parliamentary rugby side back in the 1990s. He was the left-winger; I was the right-winger. He was not quite as fast but he was a good man the salt of the earth and the sort of politician who represents the Labour Party in my mind—a good man.In essence if I look at the third reading speech that he delivered when that bill was passed in October 2002—just to give you an idea of the idea behind the Electronic Transactions Act 2002 which this bill of mine seeks to amend—he said: “The bill will also allow many interactions with Government that are presently required to be in paper form to be done in an electronic form. Because the bill is based on the international standard of the model law on electronic commerce prepared by the United Nations Commission on International Trade Law it will make it easier for business to trade electronically. The bill follows closely the Australian Electronic Transactions Act and this minimises transaction costs for exporters in our largest export market.” So Paul Swain was very pleased and that bill was actually passed unanimously.But interestingly enough supporting the bill and speaking during that debate was the Hon Richard Prebble who now is devoted to plotting my downfall in the seat of Epsom but back then he was the leader of the ACT Party. He made some interesting comments on that bill. He noticed that the Electronic Transactions Act 2002 was rushed through this House under urgency by the Labour Government. I just wanted to remind people of that. The concern was—Hon Clayton Cosgrove: Relevance.PAUL GOLDSMITH: Well the concern was—Hon Clayton Cosgrove: Relevance.PAUL GOLDSMITH: I will come to the relevance and it will all become clear because the concern was at the time—and I will quote another voice from the past Pansy Wong whom you will all recall. Pansy Wong spoke during the debate in 2002 and said: “The Minister also mentioned that the bill will remove uncertainty. I doubt that it will achieve that effect because first I pointed out that clause 6 states that when a person interprets the Act reference may be made to the model law on electronic commerce adopted by the United Nations Commission on International Trade Law [but that] introduces a lot of uncertainty. Imagine when a dispute arises as to whether an electronic signature is acceptable whether the electronic document has been received at a time when the sender or the receiver is in dispute. I can just imagine the lawyers reaching into the model law on electronic commerce adopted by the United Nations Commission.” The circumstance of that was that she was being ironic at that point. I did not quite capture the mood of that as I was expressing it but what she was trying to say was imagine—imagine—the lawyers reaching into the model law.She went on to say: “However more than that they can reach a whole raft of documented material that relates to the development of international law.” So Pansy Wong at this time was concerned that the Electronic Transactions Act which was passed under urgency by the Labour Government in 2002 was being rushed through and that there were elements of it that were going to cause trouble further down the line. One of the areas that she particularly drew attention to—and funnily enough she was quoting her colleague Tony Ryall who I see is at the back of the Chamber today. She said that he “pointed out that because of the language used in clause 11 an electronically transmitted message may be deemed to have been received by a person on the receiving end. The legislation states that as long as the sender ensures that the message left his or her system and goes to the address given by the receiver it is automatically assumed that the information would have been received.” So the point I am trying to make is that Pansy Wong was predicting—quoting Tony Ryall—in 2002 that the Electronic Transactions Act of 2002 which was rushed through in urgency would not deal effectively with some of these issues about the specifics and the details of the manner of the moment of instantaneous receipt.So 12 years later I have had to come along and tidy up the mess that was left by a hurried piece of legislation in 2002. I do not want to blow my trumpet too far but I would say that 12 years on we have dealt with that issue which was left untidy and ineffectively dealt with by that previous Government. I just also want to refer to a mention that was made by a fellow called Paul Adams an honourable member he was from United Future back in 2002. I do not think that—Hon Clayton Cosgrove: Relevance.PAUL GOLDSMITH: Well the relevance is that this is the legislation that I am amending. I am trying to get an understanding of what the House was trying to achieve through the original legislation and then from there to understand what needs to change. But I thought the Committee might be interested in this contribution from Paul Adams. He said: “New Zealand as a nation is ripe to receive positive change. The discerning have picked up on the fact that many many New Zealanders are tired of the old systems that simply are no longer relevant to the hour in which we live. For example today I wear a pink shirt and have coloured my greying hair. Just 20 years ago if I walked into the House and looked like I do today I would not have received positive comments. So I believe that that in itself shows that I am indeed open to positive change as are the three ladies in my life—my wife and two daughters who heartily approve of the change that they now see.” I do not like to be unkind but I think that may explain why United Future did not—Hon Clayton Cosgrove: I raise a point of order Mr Chairperson. I just draw your attention to the issue of relevance. I cannot for the life of me see how the colour of the shirt of a former member who was in here what 10 years ago or his attire has anything to do with electronic transactions. I know that the speaker in the chair is desperate to sort of waylay this as long as he can but there are limits. I do not think that a debate about a dress code even though Mr Ryall has broken the mould and is in the Chamber is in any way relevant to this bill.Tim Macindoe: Apart from that gratuitous comment at the end in reference to the Minister of Health which had no relevance I want to point out that the member who is objecting on this occasion is the one who has probably spent most of the last half-hour doing his level best to try to distract not only the fine member who is sponsoring the bill but also many other members. As members are trying to gather their thoughts around what is at times a fairly technical matter it is important that they are able to retain their train of thought. The problem is that members such as Mr Cosgrove are doing their level best to distract the member. So I would just point out that I think he really needs to look at himself if he has a problem with where the member is going.The CHAIRPERSON (H V Ross Robertson): Thank you. Can I just urge all honourable members to play the ball and not the member. Remember that and we will preserve an excellent field for the full play of ideas. I just ask the member to try to speak to the bill. I know that he is trying very hard and I am listening intensely to what he is saying. It is important that we debate the issues in front of us. I understand where he is coming from.PAUL GOLDSMITH: Thank you Mr Chair. I would not like to regard myself as simply a trier; I thought I was achieving the ability of talking about this bill. What I was trying to get across to the Committee was the whole purpose of this bill which I have had the good fortune to see drawn in the ballot and also the good fortune to have the support on from all members in the House for the last reading stage. I do not think too many members can claim to have unanimous support for a bill that they have brought into the House only 2 years into a parliamentary career.Hon Todd McClay: Kanwaljit Singh Bakshi did with his Military Manoeuvres Act Repeal Bill.PAUL GOLDSMITH: Thank you for pointing that out. The point I was trying to make was that this bill seeks to amend the Electronic Transactions Act 2002. Going back to the original debate it is worth reminding us that people were predicting—and I can quote Richard Prebble saying in 2002: “When we draft legislation as loosely as this I think we are being reckless and irresponsible.” So really the point I am making is that this bill amends the Electronic Transactions Act 2002 because it was flawed and it did not give that level of detail and clarity in this area around the acceptance of contract formation of electronic transactions. That is why I have brought this piece of legislation to the House for its consideration in the hope that we will provide that clarity upon which the smooth regulation of commerce in this country depends. That is why I wanted to make that point. Thank you.Hon CHRIS TREMAIN (National—Napier):At this point in time we go through the Committee stage of the Electronic Transactions (Contract Formation) Amendment Bill and arrive at clause 3 which is dealing with the principal Act the Electronic Transactions Act 2002 which this bill amends. Through the good fortune of the athletic attributes of my colleague the Hon Todd McClay who—Hon Todd McClay: Climbed up the ladder.Hon CHRIS TREMAIN: —climbed up the ladder outside the Chamber here we managed to secure a copy of the Electronic Transactions Act 2002.Hon Todd McClay: I had a touch of vertigo.Hon CHRIS TREMAIN: He had a touch of vertigo. It was good to learn that it was the Hon Paul Swain who shepherded that particular bill through the House—a fine member of this House from the Government of the day. He would be in the Opposition now. I had the good fortune to deal with Mr Swain in a number of areas. In fact when I was Minister of Internal Affairs he led the fire review that we took through at that point in time.But the reason for clause 3 is to give us a clear sense of what we are changing because clause 3 talks about the principal Act. That is why I have got that Act here before us now. I know that my own colleagues will be interested to have a look at this because there are a range of clauses in here that I am sure you will be able to talk to and actually ask some questions of the member in the chair Paul Goldsmith. We want him to stand and answer some of these questions.What is really important to start off with—and I am sure that Mr Cosgrove will be really interested—is the purpose of the principal Act because that kind of defines where we are at and what we are actually changing. So if you will bear with me I just wanted to read through the purpose of the principal Act in Part 1: “The purpose of this Act is to facilitate the use of electronic technology”—Mr Swain was really ahead of his day back then in 2002—“by—(a) reducing uncertainty regarding—(i) the legal effect of information that is in electronic form or that is communicated by electronic means;”. So we are really getting to the heart of the bill here. It continues: “(ii) the time and place of dispatch and receipt of electronic communications; and (b) providing that certain paper-based legal requirements may be met by using electronic technology that is functionally equivalent to those legal requirements.”That is at the heart of how back then in 2002 departments like the Department of Internal Affairs were starting to lead the drive of this change in information and communications technology in a drive towards a digital economy and where it had its genesis. That is why today members such as the member in the chair Mr Goldsmith have taken it upon themselves to advance the legislation. There is nothing surer than that technology is changing faster than we know. I mean all of us—look at our kids. In fact it was interesting because my son the other day came up to me—he is 17 years old—and it was the first time in a while he had to send a letter. He said: “Dad what side of the envelope does the stamp go on?”.Tim Macindoe: Really? Good lord.Hon CHRIS TREMAIN: Yes. It is quite incredible to understand how much the electronic age is changing us.The bill before us seeks to amend that principal Act that 2002 Act in the purpose clause. In particular the really relevant section in this 2002 Act is section 13 and you will note that later in the debate on the bill tonight—I think when we get to clause 5 if I am not wrong—we amend section 13. So in thinking about that that amendment becomes new section 13A. What I want to remind members of tonight is the principal Act and what is actually section 13 now.Hon Clayton Cosgrove: Wow!Hon CHRIS TREMAIN: I know Mr Cosgrove that you would be interested would you not? Section 13 of the Act is “Place of receipt” and that part of the legislation says that “An electronic communication is taken to be received at—(a) the addressee’s place of business; or (b) if the addressee—”TIM MACINDOE (National—Hamilton West):I would actually like to pick up where my colleague the Hon Chris Tremain has just left off because I think he has touched on some quite relevant issues. I am a late starter in this particular debate on the Electronic Transactions (Contract Formation) Amendment Bill and so I apologise to the fine member who is sponsoring the bill Paul Goldsmith that I was unable to hear everything that he told the Committee earlier on in the evening.Nevertheless this particular clause clause 3 is amending the Electronic Transactions Act. I was very interested that the honourable member Chris Tremain had a copy of the Act there. That Act was passed only 12 years ago and I daresay that there could be members of the public listening to this debate who would wonder why it would be necessary to move an amendment to something of that nature in a relatively short space of time. In fact I am intrigued as I look around the Chamber that with the exception of the Minister of Health in the back area where the Green members are now there is not a single member on this side of the Chamber this evening who was actually a member of Parliament at that time. I do think that if we are going to make a decision of this magnitude in amending the principal Act we do need to be able to hear from the member as thoroughly as we can what the reasons are for his feeling that this particular principal Act needs to be amended.The member told us also and this really concerned me that the principal Act in 2002 was passed under urgency. I know that there are many members on this side of the Chamber who have been accused over the last few years—sometimes quite unfairly—of such grandiose things as an abuse of process or a breach of parliamentary procedure or whatever whenever the suggestion is that a matter should be passed under urgency. Of course there have been some significant things. Budgets are frequently passed under urgency. We passed the Auckland governance legislation under urgency and a number of other things have happened. Usually Oppositions howl and scream whenever that happens and yet here we are learning that the previous Labour-led Government passed that particular Act under urgency back in 2002.I therefore ask the member sponsoring the bill if he could please when he next takes a call give us a little bit of the history of the issue or maybe there will be a member of the Labour Opposition—I see Mr Cosgrove has been here since 1842. He might be able to tell us why the member Paul Swain saw the need—Hon Clayton Cosgrove: I’m younger than you you prat.The CHAIRPERSON (H V Ross Robertson): Order!TIM MACINDOE: I think that was a particularly unparliamentary expression from Mr Cosgrove.Hon Clayton Cosgrove: What—“prat”?TIM MACINDOE: That is not the expression that he used and he well knows it. But anyway I will turn the other cheek and we will carry on. The point is that I would appreciate him taking a call to tell us why the previous Labour-led Government felt it was necessary to pass that principal Act under urgency. What were the reasons for that? An Electronic Transactions Act certainly does not obviously lend itself to that sort of treatment. As I say we have had to listen to many lectures in our time in Government as to why urgency is not an appropriate way of acting. I would also like to know what the actual vote was at the time that that happened. If it was passed under urgency—Hon Clayton Cosgrove: Look at the Hansard.TIM MACINDOE: Well I have not had a chance to look at the Hansard because I have only just become aware of the fact. That is why I am saying to the Hon Clayton Cosgrove: take a call and fill us in as to why you and your colleagues at that time felt it was necessary to move this particular Act under urgency. Tell us what the vote was. I would be interested to know how the House divided. Of the parties that were here at that time which parties supported the measure which were opposed to it and what were their reasons for it? But more important what was the actual purpose of the principal Act? We do need to know that if we are going to be able to make a considered decision about amending it. This is not a trivial point.As the Hon Chris Tremain noted just a few minutes ago technology is evolving rapidly. It is actually quite frightening at times just how quickly technological change is taking over. Quite often you get to my age and you think: where is a teenager when you need one in order to understand the latest technological gadget. I have to admit that I had that experience just a few days ago. Every year it seems that there is a new gadget on the market. We are being expected to become more and more proficient with gadgets that are being used quite often now for electronic transactions. It is important not only that we know how to use them but that we can ensure the security of those transactions when we are using all this technology.Mr Chairperson you and I are both old enough to still have cheque books and I bet you still have one. I certainly have a cheque book. I have to admit that at times I feel a bit of a dinosaur when I use it. In fact when I look at it it tends nowadays to be mainly used for charitable donations. I certainly do not pay accounts with cheques any more. I do most of those things online. But I am sure that we have all had the odd occasion of being a little bit fearful about how that is going. In fact as an electorate MP more than once I have had constituents who have been concerned about the security of those transactions. I do ask the member in charge of the bill as we focus on clause 3 this particular clause in which the sole purpose is to amend the principal Act whether he could give us that history please as to why it is necessary to do this. What was it about the original Act that he now considers to be flawed and what is it about what he is proposing to do now that will enhance the security?I also make the point that the Government has set a very ambitious target under the Better Public Services target which is a cornerstone of our administration of ensuring that a substantial number of transactions that used to take some time and involved a lot of bureaucracy and a lot of waiting and quite often a lot of expense are now available online. We are talking about the sorts of things such as applying for a passport or maybe obtaining a visa to go to another country. We all I am sure welcome anything that reduces costs and improves the efficiency and the speed with which things can be done but it is of course absolutely vital that we can be assured of the security of these matters. We want to ensure that there can be no danger of theft of identity misappropriation of funds or misuse of the particular technology which could lead to danger.We need only think about the fact that if somebody was dishonest enough they could maybe look down from the gallery and see a member on this side or on the other side of the Chamber putting a pin number into a smartphone or something. That is something that could easily happen and does often happen as members use their iPads and their iPhones in this Chamber frequently. It is possible sometimes for members of the public to look over from the gallery. If they were sufficiently savvy to be able to pick up the pin number of a member and then to get hold of that appliance then they have got the ability with that contraption to get into the member’s account to do all manner of evil. That is a very real possibility so we need to know from the member in charge of the bill whether that sort of eventuality was contemplated by the member at the time that this bill was originally being pushed through in 2002. Is clause 3 by which the principal Act is going to be amended a way in which those sorts of concerns can be alleviated?These are not insignificant questions because with the rapid evolution of technology it is likely that we will become even more dependent on these technological gadgets in years to come. Electronic transactions will probably become the entire way in which transactions are conducted in the future and we need to be absolutely sure that the legislation the member is putting forward in this Chamber tonight will be sufficient as we move forward into that era. I do ask the member in charge of the bill whether he could address himself to that as well and perhaps alert us to whether there are any matters in the bill as he is putting it forward that would cover future eventualities. I believe that this is a significant issue. I realise there has been some levity in some of the contributions and that is good. On a members’ day it is always nice to feel that there is a degree of jocularity in the Chamber and that members can enjoy a little bit of banter. Nevertheless this is a significant matter.I am a little bit envious because this particular member has achieved something in half the time that I have been in the House that I have not been able to do and that is to get a bill drawn out of the ballot and to be able to have the honour of pushing it through. I congratulate him on that and I do look forward to his answers to the questions that I have put forward. I believe that they are significant and we need to get them on to the record. I look forward to hearing his next contribution. I know that my good friend the Hon Todd McClay has one or two other questions that he wants the member to consider as well so I hope that the member in charge of the bill will be able to deal with both of them in his next contribution.The CHAIRPERSON (H V Ross Robertson): Just before I call the next member I want to caution members about name-calling which occurred during the debate. Let us remember that all members are honourable and all will get a fair and equitable opportunity to address the people’s business within the Standing Orders that govern our proceedings. By and large name-calling comes through frustration and that is understood but it is out of order as a personal reflection—I refer members to Standing Order 117 and Speakers’ rulings 28/1—because it can lead to disorder.CAROL BEAUMONT (Labour):I move That the question be now put.Hon TODD McCLAY (Minister of Revenue):I move that the question not be put because I want to intervene in this part of the debate on the Electronic Transactions (Contract Formation) Amendment Bill to talk about the principal Act the Electronic Transactions Act. I was not going to but when the Hon Chris Tremain spoke I was moved to as I am the person who climbed to the top of the ladder to get the paper copy of the Act to be able to come here and sit in the Chamber and read it. I am going to ask my colleague Kanwaljit Singh Bakshi to bring it over to me if he would because I very much believe it is quite important. He can take his time. I reckon that I have got 10 minutes in me for this part of the debate.The thing about this is that there will be members in this Chamber in the Opposition who were in Government at the time when this piece of legislation the principal Act went through who did not bother to read it back then. They would have taken part in the debate they would have been in the House they would have voted in favour of the principal Act and they did not read it. Today the hard-working member of Parliament Paul Goldsmith has brought in an amendment to the principal Act and I give you a guarantee Mr Chairman that there are members in this Chamber who were there in 2002—who were in Government at the time and who are now in Opposition—who did not read the Act back then. Now we have an important piece of legislation to amend the principal Act to fix some of the challenges and problems that Mr Goldsmith found in it and I am sure they still have not read the Act.I too would say that when I came here and had an opportunity to look at this draft piece of legislation I had not read it. That is why I went out the back and I climbed the ladder to the very top got this New Zealand Statutes 2002 Volume 2 at page 1217 and found the principal Act and started to read it. And do you know I think that any members from the Opposition who would take part in this debate who want to rush through this and are trying to get the Committee to vote on the different clauses before we are ready to who have not read this legislation the principal Act are doing themselves and the Committee a great disservice because it is a very weighty piece of history of what this New Zealand Parliament has done.When one looks at the bill Mr Goldsmith has brought before us it is not the largest piece of legislation we have had to debate on a members’ day. But when one looks at what he is trying to achieve and you take the different clauses in this and you come back to the principal Act it is clear that he has put great detail and thought into his legislation. It is clear that he at the same time has looked and found inadequacies in the legislation that was passed by a Labour Government in 2002 and that he genuinely comes here to fix them. He wants to make the lives of New Zealanders who are uncertain about their electronic transactions and the formation of contracts better by diminishing and taking away that uncertainty.I can say to my colleague that I was going to stop at the next bell anyway but what I can say to you Mr Chair is that that uncertainty that New Zealanders will be experiencing is unnecessary. Had the original movers of this legislation—some members opposite who are now in Opposition who were members of the Government in 2002 who voted on this legislation who would have made speeches in this House and who might not have read the legislation—read the legislation they could have moved Supplementary Order Papers. They could have improved it they could have spent the time that was needed in the Committee stage taken that extra bit of time in urgency to make the changes so that we would not have to be here today so that the House could be doing other business that may or may not be more important. But Mr Goldsmith has had a close look at the principal Act and Mr Goldsmith has found problems that are affecting New Zealanders and some members opposite did not take the time to get the legislation right and that is why we need to be here right now.Can I say to Paul Goldsmith I want to congratulate him on reading this lengthy piece of legislation. It actually is good legislation. It is detailed it is quite technical but the Labour Government did not get it right. I want to give members opposite the benefit of the doubt because members’ days are—what did the last speaker say about “jocularity” or something like that; we studied in different places—and it could well be that some of the challenges and some of the difficulties that Mr Goldsmith is fixing here with this legislation this year in our Parliament may not have been as obvious or as apparent in 2002. The world has changed. Many many more people are involved—Clause 3 agreed to.Clause 4 Section 4 amended (Overview)PAUL GOLDSMITH (National):Now we are getting closer to the meat of the Electronic Transactions (Contract Formation) Amendment Bill and that is clause 4. This is the part that has been amended by the Commerce Committee which was led by Jonathan Young the MP for New Plymouth and I do want to thank the committee members for the hard work they did on this piece of legislation. Originally my clause 4 was actually the purpose for this bill. What I said was: “The purpose of this Act is to establish that for the purpose of contract formation an offer is deemed to be accepted by an electronic communication at the time of receipt of the acceptance by the offeror.”In its wisdom the select committee members—and I am not criticising them in any way shape or form—considered that section 3 of the principal Act the Electronic Transactions Act 2002 sufficiently addressed the purpose of the legislation. Let us just quickly refer to that so that we know what we are talking about here. The purpose of the Electronic Transactions Act 2002 says: “The purpose of this Act is to facilitate the use of electronic technology by—(a) reducing uncertainty regarding—(i) the legal effect of information that is in electronic form or that is communicated by electronic means; and (ii) the time and place of dispatch and receipt of electronic communications;”. That is the point we laboured in the previous debate because they did not effectively manage to achieve that by the looseness of the language.The second part of the purpose set out in section 3(b) is “providing that certain paper-based legal requirements may be met by using electronic technology that is functionally equivalent to those legal requirements.” The select committee members in their wisdom decided that referring to the purpose of the principal Act would be sufficient so that they did not need to have a particular purpose in this bill. As I say that is important.The Commerce Committee decided that anyone seeking to understand the thinking behind this legislation—my member’s bill—would be able to gain that understanding by looking at the purpose of the principal Act which was passed 12 years earlier. To be honest I am not sure that I necessarily agree with the logic of the select committee. Frankly I would have preferred that my original purpose about why this particular bill was important had stood. But I am not going to die in a ditch over it. What they were trying to do in terms of economy of words and expression—not having extraneous or otiose clauses in the legislation—is important but still it would be fair to say that it rankles with me a little bit that the select committee chose to alter the way that I put the bill together but I still think it hangs together reasonably well.So what we have now in clause 4 is a fairly simple clause. It says: “Section 4 amended (Overview)—In section 4(b) replace “13” with “13A”.” I thought I would explain to the Committee just what the committee was trying to achieve there. It says that section 4 of the principal Act should be amended. If we look at section 4 of the original 2002 Act it says: “Overview—In this Act—(a) matters concerning the legal effect of information that is in electronic form or that is communicated by electronic means are set out in section 8: (b) default rules about the time and place of dispatch and receipt of electronic communications are set out in sections 9 to 13:”. The new clause in my amendment bill replaces “13” with “13A”. So that is really just to point out that the default rules about the time and place of dispatch and receipt of electronic communications are set out in sections 9 to the new section 13A which we will come to in clause 5 of this member’s bill. That is the key.So if we run through those sections we will just get an idea of the sorts of things that have been considered in the bill. The first of those is when the default rules in section 10 to 13 apply and the time of dispatch—that is an electronic communication is taken to be dispatched at the time that the electronic communication first enters an information system outside the control of the originator. [Interruption] Pardon? OK. All the details such as time of receipt and place of dispatch will give you an idea of where we have got to. The select committee did away with my purpose in clause 4 and introduced this new clause 4 which really just locates this amendment bill within the original Electronic Transactions Act. Thank you.KANWALJIT SINGH BAKSHI (National):Sat sri akaal Mr Chair and thank you very much for the opportunity. We are now debating clause 4 of the Electronic Transactions (Contract Formation) Amendment Bill. The bill has really progressed very well this evening and we hopefully will be concluding the Committee stage of this bill by the end of today.Clause 4 as introduced detailed the purpose of the bill. The Commerce Committee considered that section 3 of the principal Act sufficiently addressed the purpose of the legislation. A purpose clause is unnecessary in an amendment bill. So that is why we made some amendments to that clause. The select committee was well chaired by Jonathan Young and I would like to acknowledge him for his leadership in the Commerce Committee. The committee recommended—Tim Macindoe: Very good chairman.KANWALJIT SINGH BAKSHI: He is a very good chairman. He is not here today. His absence is very much—Tim Macindoe: He brings gravitas and dignity—KANWALJIT SINGH BAKSHI: Exactly. The select committee recommended that clause 4 be amended to update the overview in section 4 of the Act to add the reference to new section 13A.Defining the time of receipt and designated information was also considered. The select committee considered whether the terms “time of receipt” and “information system” used in sections 10 and 11 of the principal Act lacked clarity. There were so many things that were missing in the original Act and I congratulate this member on bringing this bill to the House. The principal Act also stated in section 35 that it was to be reviewed within 2 years after commencement. That still has not been picked up. The committee was also not persuaded that the terms “time of receipt” and “information system” lacked clarity and considered that those terms were in no need of definition. So clause 4 is amended by the select committee and I propose that it should be acted upon.Dr MEGAN WOODS (Labour—Wigram):I move That the question be now put.Dr JIAN YANG (National):I congratulate Paul Goldsmith again. Regarding the Electronic Transactions Act 2002 the main purpose of that Act is to reduce uncertainty about the legal effect of electronic information and communications and also the uncertainty about the time and place of dispatch and the receipt of electronic communications. The Act defines basically only the time of dispatch and also the time of receipt but not really the time when the contract is formed. So this bill the Electronic Transactions (Contract Formation) Amendment Bill will tidy up that particular loophole and will be particularly good for providing certainty to electronic contracts.Clause 4 agreed to.Clause 5 New section 13A inserted (Time of communication of acceptance of offer)PAUL GOLDSMITH (National):I am very glad that we have made such good progress on the Electronic Transactions (Contract Formation) Amendment Bill this evening and I do want to thank my colleagues all around the Chamber for the goodwill with which they have responded to this piece of legislation.We come to clause 5. This is another area where the Commerce Committee saw fit to amend the bill quite substantially. In truth that reflected some of the submissions. My original bill dealt with the problem that we were trying to deal with which was trying to clarify the law in this area by introducing a section 32A to the Electronic Transactions Act and that would have said—it was just a simple section 32A—“An offer that can be accepted by electronic communication is deemed to be accepted at the time of receipt of the acceptance by the offeror.” That was I thought a simple and elegant way of getting it across.But the concern raised by some of the submissions was that this could create a misapprehension that a hard-wired rule applies and that an offer can be deemed to be accepted electronically only at the time of receipt. That indeed was not what I was trying to achieve. The suggestion was to abandon the section 32A approach and instead insert a new section 13A into the Act and to make it clear that this was a default rule instead of a rigid approach from which the parties would be able to contract out.So now we see here that clause 5 of the bill introduces: “13A Time of communication of acceptance of offer (1) For the purpose of the formation of a contract an acceptance by electronic communication of an offer is taken to be communicated to the offeror at the time determined by section 11 to be the time of receipt for that electronic communication.” But importantly we now have a new subsection (2): “Subsection (1) does not apply if—(a) the parties to the contract otherwise agree; or (b) an enactment provides otherwise.” I think this makes it very clear that the time of receipt referred to in section 11 also applies to the acceptances of contract offers that are communicated electronically and that is the essential point of this bill.Again in response to submissions the suggestion from the select committee was to add a new section 13A(2) which I just referred to enabling parties to agree otherwise—that they may want some other formation. Interestingly—Tim Macindoe: Did they consult the member about why they were recommending that?PAUL GOLDSMITH: They did not consult me at all but I think the basic logic of that stands. Interestingly that change that the select committee brought through nicely dovetails with my next member’s bill in the ballot which is all about freedom of contract over an employment contract. So that fits very nicely with my principles for people to arrange their contracts as they see fit and have them be enforceable.What we have as a result is a facilitative Act that ensures that negotiating parties are free to specify their own mutually agreed conventions. But in the absence of that everybody knows the rules around when a contract is formed and when it is not. So as I said at the start although this bill on its own will not bring about the brighter future to which we all aspire in this Chamber and on this side in our party it does add one small piece to the jigsaw that draws together that coherency consistency predictability and certainty in our legal framework which underlies the strong economic foundations of New Zealand. That is why in the broader context of a strong stable and predictable Government it has been so successful as a Government over the past 5 years. I want to finish the debate on this bill by paying tribute to the Prime Minister and all the good work that he is doing in this country. Thank you.Clause 5 agreed to.Bill reported without amendment.Report adopted.