Validity of electronic contracts

© Tatiana Popova – 123RF.com

Given the proliferation of automated message systems, the Convention specifically allows for the enforceability of contracts entered into by such systems, including when no natural person reviewed the individual actions carried out by them. Interestingly, the Convention further clarifies that a proposal to conclude a contract made through electronic means and not addressed to specific parties amounts to an invitation to deal, rather than an offer whose acceptance binds the offering party.

Although the Convention does not have a great number of parties who have acceded to it, other jurisdictions have enacted laws with similar principles. For example, in Australia, on 10 December 1999, the Electronic Transactions Act 1999 came into force. Section 15 of Electronic Transactions Act 1999 is similar to articles 11 and 12 of the Convention. The spirit of this Act was embraced by the Australian Stock Exchange, which published guidelines for notices of meetings in August 2007. These guidelines provide that companies should endeavour to send notices of meeting to shareholders by electronic means if requested and should place the full text of notices and accompanying explanatory material on the company website.

Another example is New Zealand's Electronic Transactions Act 2002 and Electronic Transactions Regulations 2003 (SR 2003/288) which came into force on 21 November 2003. The Act and Regulations set out the rules to facilitate the use of email and other electronic technology, both in business and for interaction between government and the public. The main feature is that it allows businesses to use electronic technology, if they wish, to comply with various legal requirements for producing, giving or storing information in writing, provided the person who is given or receives the information (if there is one) consents to this.

South Africa's law

On 1 May 2011, the South African Companies Act 71 of 2008 was established. It provides that if, in terms of that Act, a notice is required or permitted to be given or published to any natural or corporate person, it is sufficient if the notice is transmitted electronically directly to that person. The Companies' Regulations restrict the manner in which such notice may be published electronically to sending the notice by electronic mail. The South African High Court however, may authorise a different means of giving or publishing such a notice by way of substituted service.

The South African Companies Act also provides that if, in terms of that Act, a document, record or statement, is to be published, provided or delivered, it is sufficient if an electronic original or reproduction of that document, record or statement is published, provided or delivered by electronic communication via electronic mail or as the High Court may otherwise authorise. It is therefore suggested that communications and contracts through social media, as another form of electronic media, should not be denied legal validity solely because they were prepared in electronic form. The mechanics and requirements however, to render electronic documents binding should be left for each jurisdiction to determine independently.