Upcoming Mallesons seminarsThe recent explosion in electronic commerce has highlighted several areas of legal uncertainty ranging from concerns about security and privacy to computer crime. The Victorian Government has said that it encourages a nationally cooperative approach and will continue to do so. However, in the absence of federal legislative action, the Minister for Information Technology and Multimedia in Victoria, Mr Alan Stockdale, released on Wednesday 1 July 1998 a Discussion Paper proposing that an Electronic Commerce Framework Bill be introduced into the Victorian Parliament in the 1998 Spring Sittings.
This article provides an overview of proposals in the Discussion Paper.
Structure
The Discussion Paper proposes a minimalist approach to regulatory intervention. As a framework law, the Bill is designed to be capable of addressing issues relevant to electronic commerce which may arise in the future. This approach is similar to that proposed in the 31 March 1998 report of the Electronic Commerce Expert Group to the Federal Attorney - General.
A summary of the key proposals in the Discussion Paper follows.
Purposes
Generally, the proposed Electronic Commerce Framework Bill ('Bill') is designed to instil business and community confidence in the conducting of transactions via the Internet and to create a framework within which efficient and competitive business can prosper.
In particular, the purposes of the Bill (as detailed in Part 1 of the Bill) are to:
- provide legislative recognition of electronic signatures in order to promote and encourage electronic commerce
- encourage the development of industry codes of practice in relation to electronic commerce
- insert in the Crimes Act (Vic) 1958 offences relating to computers
- repeal a redundant provision in the Summary Offences Act (Vic) 1966, and
- make amendments of a statute law revision nature.
Electronic signatures
The major legal impediment to electronic commerce is seen to be the common requirement that for a document to be legally effective it must be signed. In order to achieve certainty regarding the legal effect of electronic transactions, it is proposed there be an electronic process which can fulfil the purposes of a signature requirement to an appropriate degree. The Discussion Paper accordingly suggests legislative recognition of 'electronic signatures'.
The proposed definition of 'electronic signature' does not specify any particular technology and simply refers to a process applied by a person to an electronic document. The process must authenticate the person's identity and contain an acknowledgment that the document is being signed. The Discussion Paper also proposes there be an assurance that the document has not been altered. Further, it is proposed that the onus be on the signer to 'allege' that the signature was applied involuntarily or fraudulently, or that there were other good reasons why the person should not be held to it.
The Bill provides that where a person's signature is required by law, an electronic signature may be applied instead. However, two broad exceptions to this general rule may apply.
First, it is proposed that the substitution of an electronic signature for a manual signature should not be protected by law where there is evidence to the contrary (this includes agreement between the parties but the mere requirement for 'writing' will not be sufficient to exclude the new rule).
The second proposed exception covers a number of specific transaction types. For example, specific instruments which will still require manual signatures include:
- a will or any other testamentary instrument
- a trust
- a power of attorney
- an affidavit or declaration
- a negotiable instrument
- documents relating to the disposition or acquisition of an interest in real property
- a court process, or
- a prescribed document or one in a class of prescribed documents.
Delivery of an electronically signed document
A document containing an electronic signature will be deemed to be delivered when the document is opened by the recipient in readable form. However this should not affect other methods of proving delivery.
Contract formation
It is intended that the parties will be able to stipulate the choice of law and jurisdiction covering the contract.
'In writing'
The Discussion Paper states that legal advice to the Victorian Government indicates that current definitions of 'document' and 'writing' in the Interpretation of Legislation Act (Vic) 1984 are wide enough to cover digital signals. There do not seem to be any proposals to clarify this position.
Codes of practice
Industry is being encouraged to develop codes of practice to regulate electronic commerce, improve the confidence of consumers in relation to such matters as the allocation of risk and provide guidelines to assist the courts. These codes of practice may take the form of electronic contracting model provisions, which can be updated from time to time, and incorporated by reference into online agreements. It is intended that general legislative support should be given to such codes by a process for Ministerial approval. Such an approval would be published in the Government Gazette.
Computer crimes
The Discussion Paper proposes new offences for the Crimes Act (Vic)1958 including prohibiting:
- deliberate, unauthorised accessing of data
- gaining access to data where the offender has an intent to defraud, and
- gaining access to data where the offender knew or ought to have known that the data was of a sensitive nature.
The Discussion Paper also proposes that where there is a real and substantial link between the offence and Victoria the above provisions will apply. This is intended to overcome the problem of a person causing harm in Victoria but operating the computer from interstate or overseas.
Admissibility of electronic evidence
The Discussion Paper envisages that the Evidence Act (Vic) 1958 may require specific alteration in light of the Commonwealth Evidence Act 1995 ('Act') which facilitates the proof of electronically created and stored documents. The adoption of the Act is favoured because it is widely seen as technology neutral legislation. Further, it is suggested that this would provide additional certainty and predictability in electronic commerce litigation and is necessary to achieve a consistent national evidence regime. The Evidence Act (Vic) 1958 is currently under review by the Attorney-General to determine to what extent the Act is suitable for Victoria.
The Electronic Signature Recognition Body
The Discussion Paper also proposes the establishment of a new organisation, the Electronic Signature Recognition Body ('ESRB'). The ESRB could provide management and promotional support to the courts, the encryption and certification sector and users of electronic signature technologies. It is also envisaged that the ESRB would recognise relevant standards and codes of practice and apply a 'trust mark' to organisations who can demonstrate observance of strict criteria governing their information security and management practices. Given the desire to promote national consistency in the approach to electronic signatures, the ESRB would act on the assumption that it would cease operations if a suitable federal body comes into existence.
Submissions on the proposed Victorian law
Multimedia Victoria, as part of its public consultation process, is inviting written submissions from any persons and organisations who wish to express views on any aspect of the Discussion Paper.
Ros Grady, Partner
Tel (61 3) 9643 4143
ros.grady@msj.com.au