2011

LEGISLATIVE ASSEMBLY OF THE
NORTHERN TERRITORY

MINISTER FOR JUSTICE AND ATTORNEY-GENERAL

SERIAL NO. 154

EXPLANATORY STATEMENT

ELECTRONIC TRANSACTIONS (NORTHERN TERRITORY) AMENDMENT BILL 2011

GENERAL OUTLINE

This Bill will adopt national model legislation to amend the electronic transactions legislation to implement obligations under the 
United Nations Convention on the Use of Electronic Communications in International Contracts 2005 (the Convention). 

In 2005, the United Nations adopted the Convention, which updates many of the concepts in the 1996 United Nations Commission on International Trade Law Model Law on Electronic Commerce. As a consequence, amendments have been developed to amend the uniform electronic transactions legislation in all States and Territories and the Commonwealth. 

The Bill will amend the Electronic Transactions (Northern Territory) Act 2000 to enable Australia’s accession to the Convention. These amendments will modernise the Northern Territory’s laws on electronic commerce to reflect internationally-recognised legal standards and enhance cross-border online commerce. 

NOTES ON CLAUSES

Clause 1.	Short title

This is a formal clause which provides that the Bill when passed may be cited as the Electronic Transactions (Northern Territory) Amendment Act 2011.  

Clause 2.	Commencement 

This is a formal clause which provides that the Act commences on the date fixed by the Administrator by Gazette notice. 

Clause 3.	Act amended 

This clause provides that the Act amends the Electronic Transactions (Northern Territory) Act 2000. 

Clause 4.	Section 4 amended 

Clause 4 amends section 4 by omitting ‘The’ and substituting ‘(1) The’ to reflect the inclusion of new subsections 4(1) and 4(2). 

Clause 4 inserts a new subsection 4(2) to include a brief description of the provisions applying to contracts involving electronic communications, including provisions relating to the internet in particular. New subsection 4(2) clarifies that the Act contains provisions applying to contracts involving electronic communications, including provisions (relating to the internet in particular) for the following: 

·	an unaddressed proposal to form a contract is to be regarded as an invitation to make offers, rather than as an offer that, if accepted, would result in a contract;
·	a contract formed automatically is not invalid, void or unenforceable because there was no human review or intervention; 
·	a portion of an electronic communication containing an input error can be withdrawn in certain circumstances; and 
·	the application of certain provisions of Part 2 (which relates to the application of legal requirements to electronic transactions) to the extent they do not apply of their own force. 

Clause 5.	Section 5 amended  

Clause 5 amends section 5 by omitting ‘, unless the contrary intention appears’ to reflect the current drafting style. 

Clause 5 also amends section 5 to include the following new definitions: 

 ‘Addressee’ 

This new definition provides that an ‘addressee’ of an electronic communication means the person who is intended by the originator to receive the electronic communication, but does not include a person acting as an intermediary with respect to the electronic communication. 

The new definition makes clear that the addressee is the person with whom the originator intends to communicate, rather than any person who may receive, forward or copy the communication during the course of transmission.  

‘Automated message system’ 

‘Automated message system’ is defined as a computer program or electronic or other automated means used to initiate an action or respond to data messages in whole or part, without review or intervention by an individual each time an action is initiated or a response is generated by the system.

This definition confirms that the absence of human intervention does not preclude contract formation. Automated message systems used for the purposes of contract formation will not deprive the contract of legal effectiveness, validity or enforceability. 

This definition covers transactions that lack human intervention on either one, or both, sides of the transaction.

‘Originator’ 

An ‘originator’ of an electronic communication means a person by whom, or on whose behalf, the electronic communication has been sent or generated before storage, if any, but does not include a person acting as an intermediary with respect to the electronic communication. 

This definition provides that an originator is the person that generated the communication, even if the communication was transmitted by another person. Therefore, a recipient who merely stores a data message cannot be regarded as an originator. 

‘Performance’ 

This definition provides that ‘performance’ of a contract also includes non-performance of the contract. 

Clause 5 also amends section 5 by omitting the definitions of 
‘place of business’ and ‘transaction’ and substituting the following new definitions:

‘Place of business’

This definition updates the definition of ‘place of business’ in the Act, in relation to a person. The definition includes a place where a person maintains a non-transitory establishment to pursue an economic activity other than the temporary provision of goods or services out of a specific location. 

The new definition also defines the place of business in relation to a government, an authority of a government or non-profit body. The place of business for these organisations is defined as a place where any operations or activities are carried out by that government, authority or body.   

‘Transaction’

The new definition of ‘transaction’ extends the definition in the Act to include:

·	any transaction in the nature of a contract, agreement or other arrangement; and 
·	any statement, declaration, demand, notice or request, including an offer and the acceptance of an offer, that the parties are required to make or choose to make in connection with the formation or performance of a contract, agreement or other arrangement; and 
·	any transaction of a non-commercial nature. 

Section 5, definition of data, is also amended by omitting all words after ‘program’ and substituting ‘as defined in section 10(1) of the 
Copyright Act 1968 (Cth)’ to reflect the current drafting style. 

Clause 6.	Section 6A inserted 

Clause 6 insets new section 6A ‘Exemptions’. This new section makes provision for excluding certain transactions from its application. Such exclusions, if any, are to be contained in regulations.

The section outlines that the regulations may provide that all or specified provisions of the Act do not apply:

·	to transactions, requirements, permissions, electronic communications or other matters specified, or of classes specified, in the regulations for this section; or 
·	to specified classes of matters mentioned in the above paragraph. 

Additionally, a regulation may provide that all or specified provisions of the Act do not apply to specified Northern Territory laws. 

Clause 7.	 Section 7 amended 

Clause 7 omits subsections 7(3) and (4), as these regulation-making powers are captured in new section 6A. 

Clause 8.	Section 9 amended 

Clause 8 amends section 9(1)(a) by omitting ‘approval of the information communicated’ and substituting ‘intention in respect of the information communicated’ to make clear that the notion of ‘signature’ does not necessarily imply a party’s approval of the entire content of the communication to which the signature is attached. 

Clause 8 further amends section 9(1)(b) by omitting the whole subsection and substituting a new paragraph to clarify that whether or not a signature in an electronic communication is reliable should be decided in light of all the circumstances, including any relevant agreement, to prevent a party to a transaction from repudiating its signature in bad faith. 

Section 9(1)(c) is also amended by omitting ‘referred to’ and substituting ‘mentioned’ to reflect the current drafting style. 

Section 9(2)(a) is amended by inserting ‘or’ at the end, to reflect the current drafting style. 

Section 9(2)(c) is further amended by omitting ‘approval’ and substituting ‘intention in respect’ in accordance with the Model legislation. This amendment provides that rather than indicating the person’s approval of the information, it is sufficient that the signature in the electronic communication indicates the person’s intention in respect of the information communicated. 

A new section 9(3) is inserted. This amendment will provide that a reference in section 9(1) to a law that requires a signature includes a reference to a law that provides consequences for the absence of a signature. 

Clause 9.	Section 12 repealed  

Clause 9 repeals section 12. The regulation-making powers in this section have been transferred to new section 6A. 

Clause 10.	Section 13 replaced  

Clause 10 omits section 13 in accordance with the Model Bill. The amendment repeals the whole section and inserts new sections 13, 13A and 13B. These amendments concern the time of dispatch and receipt of electronic communications to make minor refinements to the current provisions to accord with the Convention.  

These amendments take into account a number of practical aspects of electronic communications, including:

·	the time of dispatch;
·	the time of receipt; and 
·	the place of dispatch and place of receipt. 

In relation to the time of dispatch, new section 13 generally provides that the time of dispatch of the electronic communication is the time when the electronic communication leaves an information system under the control of the originator or of the party who sent it on behalf of the originator. If the electronic communication has not left an information system under the control of the originator, the time of dispatch is generally the time when the electronic communication is received by the addressee. 

New section 13A provides that the default rules for determining the time of receipt will apply even if the information system supporting the electronic address is located in a different place from the place where the electronic communication is taken to have been received. 

New section 13B provides rules regarding the place of dispatch and the place of receipt. The section provides that unless otherwise agreed between the originator and the addressee of an electronic communication:

·	the electronic communication is taken to have been dispatched at the place where the originator has its place of business; and
·	the electronic communication is taken to have been received at the place where the addressee has its place of business. 

Section 13B also provides that a party’s place of business is presumed to be the location indicated by that party, unless another party demonstrates that the party making the indication does not have a place of business at that location. 

Where there are multiple places of business, for the purposes of determining the jurisdiction governing the transaction and contract formation, the place of business will be deemed to be the place that has a closer relationship to the underlying transaction. When determining the place of business that has the closer relationship to a transaction, consideration is to be given to the circumstances known, or contemplated by the parties at any time before, or at the conclusion of the contract.

Subsection 13B(3) provides that the location is not a place of business merely because it is where equipment and technology supporting an information system used by a party are located, or where the information system may be accessed by other parties. The location of an information system can be one, but not necessarily the most significant factor to consider in determining the place of business. 

Clause 11.	Section 14 amended 

Clause 11 amends sections 14(3) and 14(4) by omitting the whole subsections. The regulation-making powers are now contained in new section 6A. 

Clause 12.	Part 2A inserted  

Clause 12 inserts a new Part 2A after section 14. Part 2A inserts new sections 14A, 14B, 14C, 14D and 14E. These amendments provide additional provisions to apply to contracts involving electronic communications. 

New section 14A provides that the provisions in Part 2A apply to contracts involving electronic communications where the proper law of the contract is the law of the Northern Territory, whether or not some or all of the parties are located in Australia or elsewhere and whether the contracts are for business, personal or other purposes. 

New section 14B provides that a proposal to form a contract made through an electronic communication that is not addressed to a specific party and is generally accessible to parties making use of information systems is to be considered as an invitation to make offers, unless it clearly indicates the intention of the party making the proposal to be bound in case of acceptance. 

New section 14C provides that a contract formed by the intention of an automated message system and an individual, or by the interaction of automated message systems, is not invalid, void or unenforceable merely because automated message systems were used. 

New section 14D enables an individual who makes an input error in an electronic communication exchanged with the automated message system of another party to withdraw the portion of the electronic communication in which the input error was made if the person notifies the other party of the error as soon as possible and if the person has not received any material benefit or value from any goods or services received from the other party. 

New section 14E deals with the application of the Act to certain contracts, for example where a contract is being negotiated in a state or territory from a supplier located overseas.

Clause 13.	Section 15 replaced 

Clause 13 repeals section 15 and substitutes a new section 15. New section 15 provides that the Administrator may make regulations under this Act. This amendment reflects the current drafting style. 

Clause 14.	Part 4 inserted  

Clause 14 inserts a new Part 4 after section 15. The amendment provides that Regulations made before the commencement of the proposed section 6A will continue to be treated as if they were in effect immediately after commencement. 

Clause 15.	Act further amended  

Clause 15 provides that the Schedule has effect. The Schedule contains minor amendments to reflect the current drafting style.