Offer and acceptance

?Introduction: The question of whether contract law can absorb technological change without the need for distinctive guidelines, presuppositions or similar rules is highly dependent on the effects of the amendments to the Electronic Transactions Act 2000 (NSW) (“ETA”). The impact of the ETA on traditional common law principles varies depending on the level of certainty and predictability available in the circumstances and how the law applies.

The suitable amount of consistency is likely to vary for the purposes of different legal requirements, depending on the contract formation and how the technology responds to the certain demands of the contracting parties. At a theoretical level, what is required to attain additional certainty in the continuously emerging online domain is a system that identifies and acknowledges all contract presuppositions in order for the ETA to respond entirely and absorb technological change in regards to traditional common law principles.

Therefore, it is arguable that Eliza Mik’s statement about the impact of the ETA on traditional common law principles of contract law are suitable to a certain extent as through the analysis of the law, it becomes evident that not all avenues of change in regards to technology can be adapted to without the need for special rules, presumptions or parallel regimes. However, the construction of the common law principles of contract law are vast, widespread and cover many aspects that allows for the amendments to the ETA to promote certainty and predictability as the principles of contract law can apply to those contracts formed electronically.

Formation of a Contract – Offer and Acceptance: Offer and acceptance consideration is the established method implemented in defining whether parties who were considering entering into a contract have in fact accepted beyond the point of conferring and have established an agreement. 1 The ordinary rule is that to establish a contract, it is required that there is an offer, an acceptance and communication of that acceptance to the party formulating the offer. 2 The fundamental value is that an offer is a manifestation of readiness to contract on the positions and standings specified in the offer.

3 An offer converts into a contract only if it is accepted. There are four fundamental principles in relation to the notion of acceptance. The first is that the offeror may specify whatever is required in order for an offer to be accepted. 4 The second is that the offer and acceptance need correctly correspond. 5 Any effort to introduce different terms is a counter-offer and any parting from terms of the offer will effect in the supposed acceptance becoming unsuccessful excluding when it is accepted as a counter-offer. 6 The third key principle is that acceptance may be indirect from the party’s demeanor and need not be direct.

7 Finally, the fourth key principle is that only persons to whom the offer is made have the ability to as a result accept that offer. 8 The offer and acceptance consideration intends to determine the intent of the parties by interpreting the assertions made or conduct involved during the contracting procedure. 9 When analyzing the impact of the ETA on traditional common law principles of contract law, all principles and the applications pertaining to offers and acceptance remain unchanged; it is imperative to identify the technology explicit issues affecting their application.

Contract law maintained a limited focus on the impact of electronic means, examining the Internet mostly relative to official necessities such as the legality and enforceability of electronic contracts and jurisdictional concerns. The importance continued on the electronic procedure and the limitless appeal of electronic transactions. The rudimentary foundations in terms of intention and consideration remain the same. Offers are necessary and can be rescinded before acceptance and acceptance must be transferred within the period proposed by the offer.

10 The same principles apply to contracts formed by electronic means. Electronic contracts can be established and formed by various processes and the means of electronic communications exposes the diversity of communication methods enabled by the Internet through which the establishment of a contract is enabled. 11 Communications via email or instant messages can be compared to other means of traditional correspondence.

The most common usage of contracts formed through electronic means would be the consequence of e-commerce markets occurring online on websites where the proprietor of the website offers goods and services for acquisition. 12 One party establishes their intent by creating a website, the other party visits the website and triggers several mechanisms of the web-interface. 13 It is imperative to question whether a particular website establishes an offer or an invitation. Pursuant to Carlill v Carbolic Smoke Ball Co [1893], if an offer is made to the general public at large, the offeror becomes liable to the person who accepts the offer, not the general public who are simply exposed to it.

14 It is arguable that the differentiation between offers and invitations on websites should be dependent on the product sold or the ability to form a contract on the website. 15 However it is also debatable that some websites are established for information and advertisement purposes and online contracts are not developed exclusively across the means of sales transactions. 16 Considering the positions of the contracting parties may expand the understanding into the separation concerning offers and invitations.

The offeror is obliged by the offer as they stipulate the matters of the contract and the method of acceptance and the eventual and final decision to form a contract is centered on the offeree. 17 Traditionally, web-merchants designed websites as invitations to treat however it is now perceived that the design is constructed for the contracting procedure and the permissible user to reduce the steps necessary to form a contract, subsequently the offerees responses are therefore restricted. 18 An offer can require that acceptance be connected by a specific technique.

The diversity of communication procedures and devices accessible as a process of acceptance generates a possible perplexity for both parties. 19 The action completed in response to the offer in order to establish acceptance is subject to the formation of the offer and the points specified. 20 The electronic and web-based setting fails to alter any aspects in this regard however presents new components. The offerer selects the process of acceptance centered on the necessary imminence of reply. Acceptance is applicable once the offeree completes the specified act.

The acceptance or acceptability of substitute methods of acceptances concerns the very presence of a contract. 21 If the system of acceptance is proposed, it is arguable that unconventional acceptances would be unsuccessful and prevent the contract from founding. 22 If an offer is created electronically and no method of acceptance is identified, it is debatable that acceptance is essential by electronic measures. 23 The rising difficulty of the communication setting, especially concerning the diversity of expiring devices, addresses and communication threats commands a more rigorous tactic to the offeree’s selected mode of acceptance.

24 Pursuant to Brinkibon v Stahag und Stahlwarenhandelsgesellschaft mbH (“Brinkibon”) it is established that “there is no absolute rule as to the time when an acceptance by fax, telephone or telex takes effect, but the question depends in each case on the facts and reasonable expectations of the parties. ”25 The principle is based on the communication of acceptance to the offerer. Communication can be tied to a number of events and does not indicate the specific moment that concludes the formation process.

The ETA aims to facilitate the use of electronic transactions as well as to promote business and community confidence in the use of such transactions. 26 However, the ETA exemplifies the complications of creating comprehensive and effortlessly appropriate resolutions to the difficulties created by the use of contemporary communication devices and means in the formation of contracts. 27 Minor discrepancies in the construction of a provision can have a wide spread impact across the entrenched establishment of contract formation ideologies.

28 It is arguable that this effect can be described as intrusion and misperception to the formation of contracts. It has been established that the offer and acceptance principles of the contract formation process is effective, however the amendments to the ETA fail to create certainty and predictability as well as formulate techniques to deal with the issues that arise with electronic transactions. The ETA has little effect on the common law principles regarding contract law only as it fails to apply rules and regimes to improve the way in which electronic transactions evolve with the advancement of technology and the means of communication.

Terms of a Contract: The relationship between contract law and electronic transactions plays a significant role in the terms of a contract. The integration of terms, and occasionally the subsistence of the contract, focuses on the strategy of the website gain, or the contracting arrangement. However the aim is the same as in contracts created by conventional processes, that being to determine the purpose of the contracting parties. 29 Electronic contracting generates many reservations, concerning both the mode in which the contract is created as well as the pledged subject matter.

Electronic contracts are frequently the focus of two sets of terms, being those that govern the use of the website known as the terms of use and the other being the specific transaction known as the terms of transaction. 30 The terms of use might include several web-based requirements, for example the elimination of liability for website errors as well as communication rules. 31 The terms of the transaction are parallel to those governing the same type of transaction in a standard contractual mode.

The communication rules comprised in the terms of use may also suggest the method in which the main transaction is submitted, creating a connection amongst the two sets of terms. 32 E-commerce and web-based transactions do not allow for movement in terms of independently exchanged trades and markets as the majority of terms faced in web-based transactions are homogeneous. 33 General consistent terms are not as common in consumer-based transactions, where the parties negotiate and communicate via email.

Generally, individuals do not anticipate that there are terms that administer the browsing of websites, in conjunction with their browsing behaviour, which could conclude in the formation of a contract without their absolute knowledge, however they have constituted acceptance. 34 Knowledge, understanding or reading of the terms by the other party is not necessary, however when the presence of the terms is conveyed to them, the party is expected to construct reviews concerning the tangible substance of those terms.

35 As the presence of the terms almost certainly originates from the contractual background, the slight obligation seems to be that the other party is wholly aware that they are entering into a binding contract. Pursuant to Hood v Anchor Line [1918] the rationality or competence of notification must be personalized to all the conditions and the situation of the parties. 36 The party pursuing to include terms must vigorously notify the other party, and it is the other party’s responsibility to ascertain information on their content. Conclusion:

In conclusion, the question of whether contract law can absorb technological change without the need for distinctive guidelines, presuppositions or similar rules is highly dependent on the effects of the amendments to the ETA and the impact of the ETA on traditional common law principles. This varies depending on the level of certainty and predictability available in the circumstances and how the law applies which is evident through the evaluation of offers and acceptance as well as the terms of a contract. Contracts formed by electronic means bare various reservations for the parties involved when creating the obligations of the contract.

Although the majority of these reservations are correlated to the new tools of marking intention, the major issue behind all systematic issues is the lack of a conventional element of inspection, which would as a result outline the declaration completed throughout the contract formation procedure. The construction of the common law principles of contract law are vast, widespread and cover many aspects that allows for the amendments to the ETA to promote certainty and predictability as the principles of contract law can apply to those contracts formed electronically. BIBLIOGRAPHY:

MacLean, Alan and Rigotti, Mark, ‘Commercial and finance law: Contract Formation and Electronic Signatures under the Electronic Transactions Act’ (2001) 12 Journal of Banking and Finance Law and Practice 47 Field, Andrew, ‘Facilitating Electronic Commerce’ (2000) 74 Law Institute Journal 74 Brinkibon Ltd v Stahag Stahl und Stahlearenhandelsgesellschaft mbH [1983] 2 AC 34 House of Lords Butler Machine Tool Co v Ex-Cell-o Corporation [1979] 1 WLR 401 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 at 268 De Silva, Aldrin, ‘Electronic Transactions Legislation: An Australian Perspective’ (2003) 37 International Lawyer 1009.

Mik, Eliza, ‘Some technological implications for ascertaining the contents of contracts in web-based transactions’ (2011) 27 Computer Law and & Security Review 369 Mik, Eliza, Contract Formation in Open Electronic Networks (LLM Thesis, University of Sydney, 2007) Henthorn v Fraser [1892] 2 Ch 27 Hood v Anchor Line [1918] AC 837 at 844 Carter, John W. , Cases and Materials on Contract Law in Australia (LexisNexis Butterworths, 6th ed, 2012) Manchester Diocesan Council for Education v Commercial and General Investments Ltd [1970] 1 WLR 241 at 245 McGuren v Simpson [2004] NSWSC 35.