Young Jonathan: Electronic Transactions (Contract Formation) Amendment Bill — First ReadingText is incorporated into the Bound VolumeYoung Jonathan: Electronic Transactions (Contract Formation) Amendment Bill — First Reading[Sitting date: 15 May 2013. Volume:690;Page:9983. Text is incorporated into the Bound Volume.]JONATHAN YOUNG (National—New Plymouth): I am very pleased to stand in support of the Electronic Transactions (Contract Formation) Amendment Bill which is a bill in the name of my colleague the National MP Paul Goldsmith. Although this bill might be seen as a reasonably small technical bill in the modern age of transactions it is actually a very important bill because we know that any economy and any business economy is going to be successful only on the strength of the transactions that take place amongst traders and amongst business people. We live in this age when the internet is incredibly integrated in all of our business transactions and indeed in all of our lives. So it is important that we understand that incorporating technology within the time-tested rudiments of business is very important and it is very important to do it properly do it well and do it so there is certainty around transactions that take place via technology.This bill clarifies the legal position on the time at which a contract is formed if the acceptance of the offer is sent by electronic communication. I am not sure whether the sponsor of the bill has thought about text messages but perhaps at some point in time—Paul Goldsmith: They’re included.JONATHAN YOUNG: They are included as well he tells me. That is very important. It is to do with every form of communication through electronic means so that is good to see. The general rule of contract formation is that a contract is formed at the time that acceptance of the offer is communicated to the offeror. The general rule of contract formation is that there is that sending and receiving and acknowledgment of that receipt. When someone says “Yes I accept the offer.” or the offerer and the acceptor shake hands then the deal is done. We know that in terms of the face-to-face communications that take place.I want to just touch on some of the aspects that the sponsor of the bill Paul Goldsmith touched on in his first reading which was now some many months ago. People who are watching this at home on their TVs might just appreciate some of the background to this bill. An exception to the rule was created by acceptances by post. This goes back to the case ofAdams v Lindsell as far back as 1818. The case involved two parties to the sale of some wool. On 2 September 1818 the defendants wrote to the plaintiffs offering to sell them certain fleeces and required an answer in the course of post. The defendants misdirected the letter so the plaintiffs did not receive it until 5 September that year. The plaintiffs posted their acceptance on the same day but it was not received until 9 September. Meanwhile on 8 September the defendants not having received an answer by 7 September as they expected sold the wool to somebody else. These are the sorts of confusions that take place.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 somebody else. The judge said that if that was true it would be impossible to complete any contracts through the post because if the defendants were not bound by their offer until the answer was received then the plaintiffs would not be bound until they received word of that and it would go on and on indefinitely. So it was decided that when the offeree placed his acceptance in the post there was a fictional meeting of minds that concluded that the offer was done and gave effect to the acceptance. That idea was tidied up further into what is now referred to as the postal acceptance rule in the 1892 case ofHenthorn v Fraser where the court determined that the precise timing of the acceptance is the moment when the letter of acceptance is posted.We understand looking back in history that the timing of such events and communications is incredibly important for the orderly transaction of business. What the member Paul Goldsmith has noticed and known is that in electronic communications we do not have that time stamp available and what this bill is seeking to do is to establish that moment in time when the transaction becomes formalised. Thank you.