Contracting for a digital Australia

The Australian Government is thinking about jumping into quicksand that it might never get out of.
Written by Suzanne Tindal, Contributor

The Australian Government is thinking about jumping into quicksand that it might never get out of.

Yesterday, it released a discussion paper on contract law; it's hoping to reform legislation to cut red tape for businesses in the global and digital economy. It wants to make Australia a more attractive business and investment destination by making our contract law more international, and providing more certainty.

It points to the European Union, which thinks it can gain €26 billion by harmonising contract law across its 27 member states.

However, I couldn't help grimacing when I looked at the depths that it plans to plumb, even just in regards to the digital economy. It's going to be a hard road, with many tricky questions that you could see from "n times n" points of view.

For example, the discussion paper talks about which law online contracts should be governed by.

Many contracts have an express or implied choice of law; however, when a contract has not stipulated a choice of law, the contract is governed by the law "with which the transaction has its closest and most real connection", according to the discussion paper. This takes into account multiple factors, such as where the contract was made, the place it is carried out, the jurisdiction in which the parties reside and the subject matter of the contract.

However, things become complicated with contracts made over the internet, where traditional rules may be unsuitable.

The discussion paper lays out some of the issues:

New technologies have also transformed consumer behaviour, with a large number of sales taking place over the internet. In the case of cross-border internet transactions, it will often be unclear what legal system is the governing law. Even if Australian law applies, there may be difficulties. Internet users are often presented with an on-screen list of terms and conditions, and asked to click a box stating "I agree". Alternatively, the terms and conditions for use of a website may be available somewhere on that site (often under a hyperlink), but the user is not expressly required to assent to them. In many such cases, it may be unclear whether a contract was even formed.

When I think of all the parties that would be affected by discussions on this matter — think retailers like eBay, or online service providers like Amazon, Facebook and Google, which will stand in juxtaposition with Australian consumers and businesses desiring to conduct business online under the law they're used to — I shudder to think of the different views that will come out in the wash. Many of us have been quietly signing up to services that have placed us under the jurisdiction of Singaporean or other law via the terms and conditions.

"As with many debates, I expect there to be both passionate reformers and trenchant defenders of the status quo," Attorney-General Nicola Roxon said in a statement.

"Australia's contract law should support businesses in creating a culture of innovation, embracing technology and looking for new trading opportunities in the Asian century."

What do you think? Will the government come out of this minefield unscathed?

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