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Setting up shop online may seem like a simple way to begin trading. With the ease of setting up a website or social media page, you can start offering your goods or services to the world within days. Trading online doesn’t necessarily mean you’re free from any consumer or contract laws. For any online entrepreneur who has considered which laws are affecting their business, here are five things you need to know.

You Need to be Familiar With the Electronic Transactions Act 1999 (Cth)

If you didn’t already know, the Electronic Transactions Act 1999 (Cth) (the Act) is one of the main pieces of legislation that covers electronic transactions. It was recently updated in 2011 to reflect international standards and covers everything from the requirement of signatures to the validity of electronic transactions.

Proposals Are An “Invitation to Treat”

Although you are operating online, Australian contract laws do still apply. This means that the standard elements of a contract are still required for every transaction in order for it to be binding. For electronic transactions, the default position is that an offer that is generally accessible and presented to anyone and everyone is an “invitation to treat”. In order to set aside this default position, it’s important to have clear terms and conditions that outline that the proposal to purchase a good or service is actually an “offer”.

Input Errors Can Be Withdrawn

Online businesses often work on automated systems that send electronic communications. Under certain circumstances, it is possible to withdraw that communication. You would need to notify the other party to the transaction and you would not be allowed to use or receive the material benefit of the transaction. Although an error can be withdrawn, it does not mean that the contract itself can be terminated.

Automated Message Systems Are Valid

An automated message system can form a contract. This means that for a contract to be binding, humans do not need to intervene. In other words, once you’ve finalised your online shopping and the “Thank you for your purchase” page appears, your purchase really has been completed sans retail assistant.

Location is Important

The place of dispatch and receipt of an electronic communication will ultimately be connected to the place of business. If a party doesn’t have a place of business, it will be the party’s habitual place of residence. This is important in determining the laws that may apply to an electronic transaction if it were to be an issue. Well-drafted terms and conditions can confirm the place of dispatch of an online business to avoid confusion.

Key Takeaways

Operating a business online is not without legal considerations. Often common sense can prevail by ensuring your online business is abiding by laws that apply offline. However, the law has adapted to respond to the changes in commercial trading so understanding the legality of your online transactions is important for any online entrepreneur.

Questions about how the ETA could affect your online business? Get in touch with our online lawyers.


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