Entering into electronic contracts
Increasingly, business is being done and people are entering into electronic contracts online, via smartphone platforms or email. Even conveyancing in relation to real property is now done online.
What are the requirements for a contract?
Generally, a contract is in place and valid if the following conditions are met:
- The parties are legally competent
- There is an offer
- There is acceptance of that offer
- The consideration or price is agreed
A written signature is not necessarily required for a valid contract to exist. The terms of the agreement also can be agreed verbally. Contracts can be signed electronically since the introduction almost 20 years ago of Electronic Transactions Act 2000 (NSW) and corresponding legislation in Australia’s other States and Territories.
How can they be executed?
There are a number of ways an electronic contract can be “executed” provided that it is clear that the intention is to be legally bound:
- by an exchange of emails or text messages
- clicking an ‘accept’ button to accept terms (or even a hyperlink to terms) on a webpage
- ticking a box to acknowledge and agree in an App
- typing ‘yes’ or ‘I agree’ into an online form
- ‘signing’ with your finger a stylus/digital pen or your finger such as when receiving goods
- using an electronic signature facility to sign a document
The Act stipulates that that if a person consents to a method of electronic signature and intends that signature to be their consent to the contract, then it will be as binding as a written “wet ink” signature on paper. Act also requires that to be valid, the signatory must be reliably identified.
Some transactions are not able to be completed electronically for obvious reasons, such as:
What about Deeds?
Deeds (which previously at common law had to be signed, sealed and delivered) or other documents that need to be ‘witnessed’ were unable to be signed electronically in NSW until 22 November 2018 when the insertion of section 38A into the Conveyancing Act 1919 (NSW), which specifically allowed it, was assented to. Witnessing requires physical presence at the time of signing, so it cannot be done by FaceTime, Skype, WhatsApp etc.
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to any contractual, business-related or commercial law matter, contact Craig Pryor on (02) 9521 2455 or email firstname.lastname@example.org
This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.