Australia’s Electronic Transaction Bill 1999

April 30, 1999

Australia has published the Electronic Transactions Bill 1999. The Bill isdesigned to remove the distinction between written and electronic transactionsin Australian law. The proposed legislation is based on the `Model Law onElectronic Commerce’ developed by the United Nations Commission on InternationalTrade Law. As well as governing federal law the Bill will form the model forlegislation by the individual Australian states and territories.

Section 8(1) sets out the general principle of equality between written andelectronic transactions, which lies at the heart of the Bill:

For the purposes of a law of the Commonwealth, a transaction is not invalid merely because it took place wholly or partly by means of one or more electronic communications.

Under the Bill’s proposals, where the law either requires or permitsinformation to be in writing, the information may be provided electronically.Similar provisions cover the production of documents and the keeping of records.

If information or documents are being given to a government authority, thatauthority can stipulate the particular software requirements for communicationand the particular action to be taken to verify receipt of information.

Clause 10 allows electronic signatures provided that:

(a) a method is used to identify the person and to indicate the person’s approval of the information communicated; and
(b) having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.

The Bill does not define the term `signature’ which is unfortunate as itwould have given a measure of certainty. The matter will be left to the courtswho will have to provide their own definition without the benefit of precedents.

The Bill does not give any guidance on the technology used to affix anelectronic signature. This will be determined by the parties. The Australiangovernment’s policy is one of technology neutrality. It will be for the marketto determine development of the information economy, including the developmentand use of authentication technology. However, the matter will be kept underreview and there may be legislation in the future, if it is proved to benecessary. Concerns have been raised that the approach adopted in the Bill couldplace individuals and small businesses in an unfair bargaining position asregards the type of technology used.

Dispatch of an electronic communication takes place, unless otherwise agreedbetween the parties, when it enters an information system outside the control ofthe sender. If this involves a multiple information system, this will be when itenters the first such information system.

If a recipient has designated an information system for the receipt ofelectronic communications, the time of receipt occurs when it enters thatsystem. Otherwise receipt takes place when the communication comes to theattention of the recipient. The problem of what happens when a recipient isunable to access a communication that has been received is not addressed.

The central purpose of the Bill is to treat electronic and paper transactionsin the same way. Nevertheless, electronic commerce is bound to generate problemsunknown to traditional commerce. It will be for the courts to deal with theseissues as and when they arise.