Acceptance by Electronic Means

Topics: Contract, Offer and acceptance, Communication Pages: 43 (15685 words) Published: March 31, 2013
The Effectiveness of Acceptances Communicated by Electronic Means, or — Does the Postal Acceptance Rule Apply to Email? Eliza Mik*
The ‘traditional’ classification into ‘instantaneous’ and ‘non-instantaneous’ methods of communication must be abandoned. As all Internet transmissions are instantaneous, the choice between the principle of receipt and the postal exception must be based on other criteria. The focus must be shifted from communication devices to the characteristics of the communication process. The latter resembles either dealings face-to-face or dealings at a distance. This simple division should remain the basis for all analyses. Instantaneity and control are two of many characteristics of face-to-face dealings and are not the only factors to be taken into account when making the choice between the principle and the postal exception. The focus must be shifted from the speed of transmission and the control of the communication process to the question whether the communication process is interactive and real-time. If the interaction resembles face-to-face dealings, the application of the principle is unquestionable. The postal acceptance rule can only be debated if the interaction does not resemble face-to-face dealings and one of the parties deserves protection from the risks of the communication method chosen by the other.

The initial fascination with ‘everything Internet’ and the persistent trend to equip otherwise unexciting legal terms with the prefixes ‘cyber-’ or ‘e-’, seem to have abated. Despite nearly 15 years of electronic commerce and endless articles revolving around the legal changes and challenges allegedly brought about by the Internet, many important questions remain open. One of those questions relates to the seemingly basic problem lying at the centre of contract formation: when does an acceptance communicated by electronic means become effective? To date, legal literature has not been able to provide a definitive answer. Existing analyses appear simplistic and based on a general lack of understanding of the underlying technologies. It is surprising that electronic commerce managed to thrive despite the lack of certainty and predictability in such an important issue like the time of contract formation. This paper analyses the problem of determining the time of formation on the basis of the ‘offer and acceptance’ model. The latter comprises interpretative rules to determine when the minds of the parties have met.1 Although harnessing a sequence of electronic acts into ‘offers’ and * PhD, LLM (Sydney). 1 J W Carter, Carter on Contract, Vol 1, Butterworths LexisNexis, Sydney 2002 (hereinafter referred to as Carter on Contract), §02-050; Hyatt Australia Ltd v LTCB Australia Ltd [1996] 1 Qd R 260 at 264 per McPherson JA; The Law of Contract, M P Furmston ed, Butterworths, London, 1999, para 2.2.


Acceptances Communicated by Electronic Means 69

‘acceptances’ may appear artificial,2 only the offer–acceptance analysis permits the establishment of the precise moment of formation. While acknowledging the fact that contracts can come into being without a discernible ‘offer and acceptance’ being present,3 this paper focuses on the difficulties of applying the offer and acceptance model to novel communication scenarios. The aim is not to provide a definitive solution regarding the moment of effectiveness of acceptances communicated by electronic means. The aim is to explore the inconsistencies in popular arguments, the blind alleys they lead to and the problems created by an undisciplined use of terminology. In particular, the persistent focus on the speed of transmission, couched in the term ‘instantaneousness’, is criticised. ‘Instantaneousness’ is a distracting factor and should be abandoned from the discussion altogether. A more simplified and technology independent approach is proposed. The effectiveness of an acceptance on receipt is regarded as the principle, while...
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