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E-CONTRACTING- HOW TO AVOID AN E-DISASTER
LEGAL ARTICLE
The direction of contract management practices within the procurement industry has been driven by the push for efficiency improvements in project delivery, and the need to enhance process and record management. The procurement sector has begun to implement e-contracting and e-tendering to improve coordination and collaboration among contracting parties. With benefit, comes risk. The use of e-contracting creates a number of issues which contracting parties should be mindful of and
need to properly address. If the risks associated with electronic contracting are not properly resolved, then the practical and legal consequences for contracting parties can be serious. What does e-contracting mean? Put simply, e-contracting is a process whereby certain contracting activities take place within a purely electronic environment. Proposed parties to a contract may wish to negotiate and form a contract through electronic means. Once a contract is formed, parties may
wish to electronically administer and manage the contract (for example, to deliver contractual notices or agree to contractual amendments). This also extends to the archiving of project records and communications using an electronic storage medium. Risks and solutions The table below sets out some of the key risks associated with e-contracting (in the main stages of the contracting process) and some of the potential solutions to address those risks.
Contractual Stage
Identified Risks
Potential Solutions
Contract formation
How can parties to a contract avoid the Include clear provisions in the contractual offer that legal uncertainties in determining the specify how acceptance should be communicated and precise point in time that an electronic when acceptance is deemed effective. contract has been formed? In cross-border or interstate transactions largely facilitated by e-contracting, what can parties do to ensure certainty of place of contract formation?
Include clauses in the contract where the parties agree to submit to the jurisdiction of the courts of a particular place for hearing and determination of a dispute under the contract.
What steps can parties take to avoid and reduce associated costs of fraud in an electronic environment, such as contracting with a party that does not have the authority to contract?
In Queensland, a party may rely on section 26 Electronic Transactions (Queensland) Act 2001 (Qld) (ETQA) to deny the authenticity of an electronic communication sent without their authority. It is important for contract parties to continue carrying out due diligence processes to correctly identify the person who has the authority to contract
Engineering for Public Works | March 2016