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8 Other issues

346 THE PURPOSE OF THIS CHAPTER is to identify, without critical analysis, a number of wider issues that arise through the use of electronic commerce. We have identified six discrete issues that must be addressed to ensure a consistent approach to electronic commerce issues and allow the medium to be used to its maximum potential.

347 We are aware that the issues may raise other concerns and we welcome submissions on those concerns. The issues we raise involve specialist areas of law in which particular bodies (including some with law reform functions) are required to deal. In addition to seeking submissions on how to address these issues, we also seek comment on who should address them. One option is for each government agency responsible to address the particular topic under its control; the other is for the Law Commission to retain a co-ordinating role in an endeavour to maintain a consistent approach to the legal infrastructure for electronic commerce.

348 The subjects which we raise in this context are:


349 In the business world it is often necessary to impart confidential information. Sometimes that confidential information will have a proprietary element as intellectual property belonging to one or other of the intending contracting parties. It is important that such information be kept in confidence and that other entities (particularly potential competitors) do not, and cannot, access it. Many people engaged in electronic commerce will wish to encrypt information imparted by them so that it is not known to the world at large. Electronic signatures and digital encryption technology has much to commend it to the business community for ensuring that confidential communications remain confidential.

350 However, there are other social imperatives at work. It is in the interests of the community at large that those responsible for national security and domestic policing of criminal law can access information to detect crime and prosecute criminals. If law enforcement agencies cannot access information passing between two traders it will not, necessarily, be possible to detect illicit trade in arms or the illegal trading of child pornography. Where does the balance lie?

351 We seek submissions on this wider issue. How should New Zealand balance the competing interests of privacy and confidentiality of communications with the rights of the community to have proper and adequate policing of its laws?

352 We also seek submissions on which agency is best to address this issue. The Privacy Commissioner has an obvious interest in ensuring the confidentiality of personal information but not necessarily the continued confidentiality of intellectual property. The Police, the Serious Fraud Office and national security advisers (including the Government Communication Security Bureau which has responsibility for developing encryption technology within New Zealand) all have countervailing interests. Should one or more of those bodies investigate this aspect of the law or should it be left to the Law Commission, as an independent body, to co-ordinate responses, consult with relevant government departments and agencies, and report?

How can the appropriate balance be struck between the legitimate need to protect confidentiality of communications and the equally legitimate need of the community to ensure its laws are properly policed?
Which government agency is best placed to address the need for reform and the nature of any reform?


353 Two issues have been identified as requiring comment: electronic money (also known as digital cash) and paperless documentation in international trade transactions.

Electronic money

354 The issue of electronic money (EM) has essentially been driven by the cost of using existing forms of payment. Cheques and credit card transactions are expensive, particularly for the vendor who carries the risk of dishonour on one hand and the costs of processing and paying the card issuer on the other. Automatic teller machine (ATM) and electronic funds transfer at point of sale (EFTPOS) transactions also have costs in that they require online processing of transaction, and therefore take time and involve telephone charges. The use of cash involves none of these disadvantages; the only cost is that of keeping it secure and banking it. (The cost to the state of keeping currency in circulation is a hidden cost here.)

355 It has been suggested that the future of electronic commerce (on the internet at least) lies in extremely small transactions. In particular, the internet is suited to high volume but very low value transactions, predominantly for the supply of information or the use of online services such as games or reference works (Sneddon 1998 4; Tyree and Beatty 1998 5–6). Although it is perfectly feasible technically to use credit cards or invoicing to sell goods or services over the internet, both have disadvantages which prevent the internet’s true commercial potential being realised.115

356 Two types of EM have been developed commercially: stored value cards and digital cash. Stored value cards are “smart cards”, that is, cards which contain their own digital processor. Cards may be disposable (the card is purchased bearing a value and thrown away when that value has been spent) or reusable (the value on the card must be debited from a bank account by means of a terminal). In either case, the value on the card is spent by transferring it from the card to the recipient by means of a terminal. Because the terminal operates offline (unlike an ATM or EFTPOS terminal) it is cheaper to operate, faster to use, and more portable than EFTPOS terminals. It would also be possible to transfer value through computer networks by means of personal computers equipped with card readers. As Sneddon notes, the latter is a feature of Mastercard’s Mondex system (1998 3).

357 Stored value cards seem to be intended as a means of replacing cash as an efficient method of payment for small day-to-day consumer transactions (Sneddon 1998 2). As such the following discussion may be of marginal relevance to this report as a whole. However, there is no technical limit to the amount that can be stored or transferred using stored value cards, and it is therefore possible that such technology could be used for larger commercial transactions.

358 Smart cards may operate by directly transferring credit (in which case stored value could theoretically circulate indefinitely without ever being redeemed for money, and would effectively become negotiable), or in a manner analogous to cheques, by transferring a non-negotiable debt to be honoured by the issuer of the card (Sneddon 1998 2). The reason for different approaches is effectively a trade off between privacy and security. Where negotiable credit is used, there is complete privacy in that no third party can monitor all transactions; if the card is stolen, however, any value stored on that card may be taken leaving the cardholder without a remedy against the issuer (as with the theft of cash). By contrast, non-negotiable schemes offer security in that it would be possible to structure the contract between cardholder and issuer so that the issuer bears the risk of unauthorised transactions; but the issuer will have a complete record of all the cardholder’s transactions. Sneddon respectively refers to these systems as unaccounted and accounted, noting that a system may fall somewhere between the two extremes (partially accounted).

359 Digital cash essentially means the representation of money in an electronic form which parties to a transaction can use in a prescribed manner as if it were money (Tucker 1997 47). Tyree and Beatty identify the most basic elements of digital cash as being a message (coin) issued specifying:

The coin would be encrypted using a digital signature to guarantee the identity of the issuer.

360 A coin issued under such a system works in a manner analogous to a bank cheque. The purchaser (P) requests the issuer (I) to supply coins for a certain value. The issuer debits P’s account and issues the coins. P then sends the coins to the vendor (V). V sends the coins to I who verifies that they are genuine and have not already been redeemed (ie, “spent”). I then credits the value of the coins to V’s account. Because the coins may be copied, V must redeem them immediately. Such systems already operate commercially (Gringras 1997 375; Tyree and Beatty 1998 6).116

The legal status of electronic money

361 Without delving too far into economic theory and legal history, it seems clear at the moment that no electronic money system currently qualifies as legal tender (Sneddon 1998 1).117 Sneddon refers to it as “obligation money” and makes the following points:

The question whether payment by an EM system would constitute an absolute discharge of the payer’s liability, or whether a presumption of conditional payment would apply, would fall to be decided on the facts of a particular payment system.

362 A final question is the effect of s 25(1) of the Reserve Bank of New Zealand Act 1989 which makes the issue of bank notes the sole right of the Reserve Bank of New Zealand. “Bank notes” are defined in s 2 of that Act as “any negotiable instrument used or circulated, or intended for use or circulation, as currency”. If EM is issued in an effectively negotiable form, the question may arise as to whether the issuer would breach the sole right of the Reserve Bank.

Should issuers of “electronic money” be required to register as banks under the Reserve Bank of New Zealand Act 1989?
Is special legislation necessary, for example, to prevent “electronic money” from being used to launder money, or to protect consumers in the event of issuers defaulting?
Is there any need to be concerned about the international movement of “electronic money”?
Are there any legal or economic implications arising from allowing “electronic money” issued in one country to be redeemed in another?
Should banking issues be addressed by the Law Commission or the Reserve Bank of New Zealand?

Paperless documentation

363 In the context of international trade transactions, the major impediment to the use of electronic documentation is domestic legislation requiring signed paper documents. Initial informal discussions with banks indicate that universal practice in international trade transactions is to adopt the ICC’s Uniform Customs and Practice for Documentary Credits (ICC, 1993) (UCP 500). Article 20(b)–(c) of the UCP 500 provides:

(b) Unless otherwise stipulated in the Credit, banks will also accept as an original document(s), a document(s) produced or appearing to have been produced:

(i) by reprographic, automated or computerized systems;

(ii) as carbon copies;

provided that it is marked as original and, where necessary, appears to have been signed.

A document may be signed by handwriting, by facsimile signature, by perforated signature, by stamp, by symbol, or by any other mechanical or electronic method of authentication.

(c) (i) Unless otherwise stipulated in the Credit, banks will accept as a copy(ies), a document(s) either labelled copy or not marked as an original – a copy(ies) need not be signed.

(ii) Credits that require multiple document(s) such as “duplicate”, “two fold”, “two copies” and the like, will be satisfied by the presentation of one original and the remaining number in copies except where the document itself provides otherwise.

It is therefore clear that rules as between banks allow for the use of electronic documents and signatures.

364 In practice, banks use a system known as SWIFT (Society for Worldwide Interbank Financial Telecommunications) to set up lines of credit for trade transactions. SWIFT operates in virtually all countries with which New Zealand businesses trade. Using SWIFT, a line of credit may be established between the vendor’s bank and the purchaser’s bank without the need for paper documentation. However, in order to draw on that line of credit, paper documentation is required to meet domestic statutory requirements such as letters of credit (Bills of Exchange Act 1908) and bills of lading (Mercantile Law Act 1908).

Are any further steps beyond redefining “writing” and “signature” to include electronic equivalents necessary to facilitate paperless international banking transactions?


365 We have identified three issues which require attention:

Domain names

366 A domain name is the unique “address” of a presence on the world wide web (see Gringras 1997 129–131). The format for such sites is generally “http://www.[name].[suffix]”. For New Zealand operators, the usual format is to use the suffix “” – but there are other options. For example, the Law Commission’s website is For international businesses, the most sought after domain names are those ending with the suffix “.com” since this is the oldest and best established suffix, and also one which has no obvious geographical references. Anyone can operate a website anywhere using any name, provided they have registered that name with the appropriate authority. The fact that some domain names contain a geographical reference (eg, “.uk” for the United Kingdom or “.au” for Australia) gives no clue to the geographical location of either the server from which the site is run, or the location of the owner; rather it refers to the issuer of the domain name. Domain names are issued by authorities such as Nominet UK in the United Kingdom, Network Solutions Inc in the United States, and the Internet Society of New Zealand in NZ. They are issued on a first-come-first-served basis, and may be traded like any other commodity. Applicants are not usually required to prove they have any right to use a particular name, as a domain name represents a technical right rather than a legal right.120

367 For businesses wishing to maintain a presence on the internet, either for marketing and advertising, or for conducting business, the ability to register an appropriate domain name is of paramount importance. In particular, a company is likely to want to use a registered trade mark as a domain name in order to maximise public and commercial visits to the site. This raises the question of whether it is possible for a trade mark owner to prevent other people from:

368 It appears that use of a trade mark as a domain name by an unauthorised person or company can constitute either passing off or a breach of s 9 of the Fair Trading Act 1996 (Harrison and Frankel 1996 60). This result was confirmed in a recent decision of the English High Court, Marks & Spencer plc and Ors v One in a Million and Ors [1998] FSR 265,121 in which the deputy judge stated:

Any person who deliberately registers a domain name on account of its similarity to the name, brand name or trade mark of an unconnected commercial organisation must expect to find himself on the receiving end of an injunction to restrain the threat of passing off, and the injunction will be in terms which will make the name commercially useless to the dealer. (272).

The decision in Marks & Spencer has now been applied in the New Zealand courts in Oggi Advertising Ltd v McKenzie & Others (unreported, HC Auckland, 2 June 1998, CP147/98; to be reported in [1998] NZLR).

369 However, it should be noted this protection of a trade mark only extends to domain names issued to parties within the same jurisdiction. Thus, there would be no way in which a New Zealand trade mark owner, for instance, could prevent a company in Iceland registering and using that trade mark as a domain name, despite the fact that internet browsers using the trade mark to conduct a search would be as likely to find the Icelandic site as the New Zealand site.122

Liability for breaches of copyright

370 Copyright issues may not strictly relate to international electronic trade, but nevertheless the issues raise difficult questions of liability. The first is the question relating to the liability of ISPs for infringing acts by subscribers; the second, liability of network users for downloading or reading infringing material.

371 The liability of an ISP for authorising breaches of copyright was briefly referred to by the High Court of Australia in Telstra Corporation Ltd v Australasian Performing Rights Association Ltd (1997) 146 ALR 649. In that case, Kirby J suggested obiter that there is an apparent need for legislative reform to protect ISPs from liability to the owners of copyright material in the event of a subscriber using his or her internet link to breach copyright. Whether it is necessary to reform New Zealand law remains unclear. But commentators have suggested that liability of an ISP to the owner of copyright should only arise when the ISP can realistically exercise some form of control over the material published by its subscribers (Harrison and Frankel 1996 62; Lim 1997 192). This argument is analogous to that accepted by the court in Cubby, Inc v CompuServe, Inc 776 F Supp 135 (SDNY 1991) in finding an ISP not liable for publishing defamatory remarks made by a subscriber. However, a bulletin board operator who exercises or purports to exercise editorial control over the content of a site may be liable for material published on that site, even if he or she is unaware of that particular publication.123

372 One complex issue is whether publication on the internet constitutes transmission by a cable programme service under s 4 of the Copyright Act 1994 (Harrison and Frankel 1996 63). In Shetland Times Ltd v Wills [1997] EMLR 277, this was decided in the affirmative under s 7 of the materially identical United Kingdom statute, the Copyright, Designs and Patents Act 1988 (see case discussion in paras 377–378).

373 As regards liability for downloading copyright material, s 2 of the Copyright Act 1994 provides:

(a) Means, in relation to any description of work, reproducing or recording the work in any material form; and
(b) Includes, in relation to a literary, dramatic, musical, or artistic work, storing the work in any medium by any means; and
(c) Includes, in relation to an artistic work, the making of a copy in 3 dimensions of a two-dimensional work and the making of a copy in 2 dimensions of a three-dimensional work; and
(d) Includes, in relation to a film, television broadcast, or cable programme, the making of a photograph of the whole or any substantial part of any image forming part of the film, broadcast, or cable programme;
and copy and copies have corresponding meanings:

Clearly, downloading copyright material on to a computer hard drive or other storage device constitutes copying for the purposes of that Act. However, merely reading the material published on the net may not qualify (even though a copy of the material is made temporarily on the screen of the person reading the material) if it is an implied requirement that the copy be stored permanently. Even if merely reading an article were to constitute making a copy, there might be evidential difficulties in proving the identity of the person responsible.

374 A more complicated issue arises when the owner of copyright material in one country places the material on a website where it may be copied by anyone, anywhere. In this example, while the there has been no copyright within the owners own jurisdiction, there may yet be an infringement if copyright is owned by different people in other jurisdictions. The owner of the website on which the material was originally published may consequently be liable for authorising publication outside the owners jurisdiction, although it may be possible for the website owner to avoid liability by use of an appropriate warning (Harrison and Frankel 1996 62).

Hyperlinks, framing and meta tags

375 Hyperlinks are links embedded in text which allow browsers on the world wide web to move between websites directly without having to search. Hyperlinks do not constitute copying of the original website; it is the browser using the hyperlink who makes the copy when the website document is downloaded to his or her computer.

376 The primary issue arising from the use of hyperlinks is whether their use to give browsers access to a website infringes any intellectual property rights owned by the operator of that website (see, for example, French 1998 41; Betts 1998; de Zwart 1997 181). It should be noted that the main reason why this has become contentious is not because of losses caused directly by infringements of copyright material on the internet. Rather, it is because websites are constructed with “gateways” (see footnote 92) through which users must pass in order to reach desired information (pages). These gateways often carry advertising, which the website owner can charge the advertiser for in the knowledge that a known number of browsers access the site each day. Hyperlinks threaten this source of advertising revenue because they allow a browser to bypass the advertising “gateway” and access the desired page directly.

377 The use of hyperlinks as a breach of copyright has received judicial consideration in Scotland in The Shetland Times Ltd v Wills [1997] EMLR 277. In that case the defender used the pursuer’s headlines as hyperlinks to gain direct access to articles, bypassing pages carrying advertising. (A similar fact pattern was alleged in Ticketmaster Corporation v Microsoft Corporation Civ No 97-3055 (DPP) (CD Cal) cited in de Zwart 1997 187–188). In the Shetland Times case this was held to be contrary to s 20 of the Copyright, Designs and Patents Act 1988 (UK), a section equivalent to s 33 of the Copyright Act 1994 (French 1998 41). Because both a website article and a hyperlink composed of a quotation from that article constitute a cable programme service for the purposes of s 7 of the Copyright, Designs and Patents Act 1988 (UK) (s 4 of the New Zealand Act), the inclusion of such a hyperlink within another website constituted an unauthorised inclusion of copyright work (the headline) in a cable programme under s 20.

378 Several points can be made following the Shetland Times case. First, there may be a distinction between a hyperlink which is composed of text quoted from the linked site and a link composed only of the name of the site (Betts 1998 8).124 Betts however, argues that even where the hyperlink itself is not composed of material taken from the copyright work, it may still be considered as authorising a third party (the browser) to breach copyright. Secondly, it may be possible to argue that posting copyright material on a website constitutes an implied licence to link that material to other sites, hyperlinking being the essential feature of the world wide web. Clearly no such argument was made in the Shetland Times case, and this argument remains as yet untested (Betts 10).125 Even if such an implied licence exists it could in any case be expressly revoked. Third, even if the “implied licence” argument is successful, it would nevertheless be possible to stop unwanted hyperlinks by simply warning visitors to a site or page that the owner does not give permission for hyperlinks to be made directly to that page. Finally, because the issue is more about protecting advertising revenue than enforcing intellectual property rights, there should (in theory) be no objection to creating a hyperlink to a “gateway” bearing advertising despite this being legally indistinguishable from creating a hyperlink which by-passes the gateway. In fact, such a link would presumably increase the value of the site to the owner by supplying more visitors.

379 “Framing” is a variation of hyperlinking which raises the same issues. When a browser clicks on a hyperlink which uses framing, the linked site appears in an open widow on the linking site. This allows the operator of the linking site to cut out the advertising on the linked site and substitute his or her own advertising. Quite apart from the copyright issues raised, it is possible that this would suggest to the browser a relationship between the linked site and the linking site. This is likely to constitute misleading conduct in terms of the Fair Trading Act 1986 s 9 (Betts 1998 11–12).

380 A further issue is the use of trade marks in meta tags. meta tags are text embedded in the programming language of a website which is invisible to the casual browser but which can be detected by internet search engines. The result is that the search engine will record a hit against the infringing website when the browser is conducting a search for a particular trade mark. The objective is of course to get browsers looking for site X to visit a competitor’s site instead. Not only is this likely to be misleading conduct under the Fair Trading Act, but may be an infringement on the trade mark since the trade mark is being used in conjunction with unauthorised products (Betts 1998 19–20).


381 Difficult questions of intellectual property law arise in the context of electronic commerce because the scope to infringe against copyright on the internet is limited only by the imagination of those attempting to infringe and the willingness of copyright owners to continue to publish material on the internet. We seek submissions on the issues we have raised and also as to the appropriate body to conduct research into these issues, given that the Ministry of Commerce has responsibility for intellectual property issues.

Do the laws which protect intellectual property need to be reformed to cope with new forms of electronic communications and publishing? If so should the Law Commission or the Ministry of Commerce undertake such work?


382 As securities are now traded, and transactions settled, in a paperless environment on the Stock Exchange’s FASTER (Fully Automatic Screen Trading and Electronic Registration) securities transfer system,126 the remaining issue is the application of the Securities Act 1978 to advertisements placed on the internet or otherwise distributed electronically. In correspondence to the Law Commission dated 11 November 1997 the Securities Commission said that it has used its powers under s 38B of the Act (formerly s 44A) to prohibit the publication on the internet of advertisements which do not comply with the Act. It should be noted that s 38B is media-neutral in that it allows the Securities Commission to prohibit the “distribution” of advertisements; there is no requirement that advertisements be printed on paper.

383 Unlike s 3 of the Fair Trading Act, the Securities Act does not purport to extend jurisdiction extra territorially. The question is whether the Securities Commission should have power to regulate offers of securities to the public which appear on the internet and which are sourced from a jurisdiction other than New Zealand. And, if that jurisdiction was to be granted what realistic options are there for enforcement of those laws?

Should the Securities Act 1978 be amended to give the Securities Commission jurisdiction over securities offers made to the New Zealand public from overseas? Should this issue be dealt with by the Law Commission or the Securities Commission?


384 Tax law presents problems in the electronic environment; in particular problems concerning place of residence, source of income, and the distinction between goods and services. These issues have already been raised by the Inland Revenue Department in Guidelines to Taxation and the Internet (, 15 September 1998).

385 In international transactions, liability for tax is levied on the basis of both the place of residence of the taxpayer and the source from which the income was derived. A resident of a country is subject to tax in that country on the resident’s entire worldwide income. In addition, where a taxpayer earns income sourced in a country other than its country of residence, that income will be taxable in the country of source, subject to a double tax agreement (DTA). If applicable, a DTA will generally provide that the country of source has no right to tax the income of a non-resident unless the taxpayer has a permanent establishment in the country of source. The questions that arise are:

386 Three tests are used to define whether a permanent establishment exists in the country of source:

Taxpayers can have permanent establishments in several countries.

387 Whether a computer can constitute a permanent establishment therefore depends on how it is used. A simple website used to carry advertising for products will not constitute a permanent establishment because advertising is an exempted activity under the activity test. However, a website which is used to take orders, receive payments and deliver a product digitally could be considered as a permanent establishment. This raises additional complications if a business maintains websites on servers in more than one country in order to speed up global response times.

388 When income is sourced in New Zealand it is subject to New Zealand income tax, unless a DTA applies and the taxpayer does not have a permanent establishment in New Zealand. Whether income is in fact sourced in New Zealand when a transaction occurs electronically is far from clear. Simcock has suggested that even when delivery of goods occurs in New Zealand, the source of income may still be elsewhere (Simcock 1998 2).

389 The distinction between goods and services is important because GST is levied differently on each. According to s 2 of the Goods and Services Tax Act 1985:

Goods means all kinds of personal or real property; but does not include choses in action or money:


Services means anything which is not goods or money:

Thus, software supplied with a “shrink-wrap” licence128 (for example, most PC applications or games) would be classed as services because the right to use the software constitutes the bulk of the price. (The actual medium used to record the software, such as a CD is of little commercial value, and is in any case worthless without the licence. Furthermore, where the software is downloaded from the internet rather than purchased in a box, no physical medium is delivered).

390 The distinction for an overseas supplier is vital, because he, she or it is not liable for GST for services supplied in New Zealand, but is for goods (Inland Revenue Department Guidelines to Taxation and the Internet). When the service is performed outside New Zealand, the New Zealand resident pays no GST either. Furthermore, the permanent establishment of a purchaser of goods or services supplied by a New Zealand resident is relevant in assessing the amount of GST payable. Goods or services supplied by a New Zealand resident to a non-resident are zero rated for GST, but subject to 12.5 percent GST if supplied to another New Zealand resident.

Is there a case for special rules for the taxation of electronic transactions? Should such issues be addressed by the Law Commission or the Inland Revenue Department?


391 Many statutes require businesses or government agencies to keep a wide variety of records or registers, often with penalties for non-compliance. Examples are the Companies Act 1993 s 87, the Goods and Services Tax Act 1985 s 75, and the Land Transfer Act 1952 s 33, but the list is extensive.

392 There is a tendency for modern statutes to allow such information to be recorded and stored electronically. This is of benefit to all parties concerned since a well organised electronic database offers a great reduction in the amount of physical storage space required and improved access to the records. Typical examples of such provisions can be found in the Companies Act 1993 s 190, the Goods and Services Act 1985 s 75, and the Customs and Excise Act 1996 s 95. Section 90 of the Companies Act 1993 reads as follows:

(1) The records of a company must be kept

(a) In written form; or

(b) In a form or in a manner that allows the documents and information that comprise the records to be easily accessible and convertible into written form.

(2) The board must ensure that adequate measures exist to

(a) Prevent the records being falsified; and

(b) Detect any falsification of them.

393 Article 10 of the UNCITRAL Model Law on Electronic Commerce is a generic section which would generally allow records to be stored electronically in all cases. It would therefore remove the need for individual statutes to address the issue. It would also have the effect of standardising the rules under which records are stored electronically. Article 10 provides:

(1) Where the law requires that certain documents, records or information be retained, that requirement is met by retaining data messages, provided that the following conditions are satisfied:

(a) the data message contained therein is accessible so as to be usable for subsequent reference; and

(b) the data message is retained in a format in which it was generated, sent or received, or in a format which can be demonstrated to represent accurately the information generated, sent or received; and

(c) such information, if any, is retained as enables the identification of the origin and destination of a data message and the date and time when it was sent or received.

(2) An obligation to retain documents, records or information in accordance with paragraph (1) does not extend to any information the sole purpose of which is to enable the message to be sent or received.

(3) A person may satisfy the requirement referred to in paragraph (1) by using the services of any other person, provided the conditions set forth in subparagraphs (a),(b) and (c) of paragraph (1) are met.

394 The Guide to Enactment of the Model Law emphasises that article 10 does not require information to be stored in an unaltered state (paras 72–75). Under para (1)(b) the user may retain the substance of a message rather than its form, provided the information so recorded is demonstrably accurate. Paragraph (1)(c) requires the storage of transmission information (the originator and recipient of a message and the date and time of transmission) only when it is necessary to identify the original message. Such transmission information would not be required when the message can be sufficiently identified by other means.

395 In its 1998 report, Electronic Commerce: Building the Legal Framework, the Australian Electronic Commerce Expert Group concluded that article 10 prescribes an appropriate basis for the equivalence of electronic and paper-based record retention requirements (paras 4.5.56–4.5.59 and recommendation 10). Provisionally, the Commission agrees. We would add that although article 10 is technologically specific, it can be regarded as purely facilitative in that it does not require records to be stored electronically. Rather it sets out the standards for those who choose to keep records electronically.

Should New Zealand enact a provision similar to article 10 of the UNCITRAL Model law on Electronic Commerce allowing those people or organisations who are required to keep records to do so electronically?


396 The issues discussed in this chapter represent potential legal problems which have been highlighted by the advent of electronic commerce. We invite comments as to whether these problems in fact constitute substantial barriers to commerce, and if so, what forms reform should take. The list is not intended to be exhaustive; we would also welcome comments as to other areas in which the law inhibits trade. Issues so raised will be dealt with in our second report on electronic commerce, to be published in 1999.

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