For an agreement to amount to a legally enforceable contract there must be an "offer", a corresponding "acceptance", "consideration" and the "intention to create legal relationships". These common law rules continue to apply to contracts concluded through the Internet. The Electronic Transactions Ordinance (ETO) (Cap. 553) merely supplements these existing rules. So how do these rules work in the context of contract formation online?

	"Offfer"
	"Acceptance"
	"Invitations To Treat" Would Not Be Regarded As "Offers"
	How About Contracts That Have To Be In Writing?
	How About Exemption Clauses? Are They Controlled?

An "offer" is a manifestation of the desire to enter into a contract knowing that once the other party accepts the proposed terms, the contract will be legally binding. The person who makes an offer is called an "offeror". The person who receives it is called the "offeree". Section 17 of the ETO now explicitly provides that an "offer" may be expressed by electronic means.

An "acceptance" is the unconditional and unequivocal acceptance of the terms offered by an offeror. Section 17 of the ETO now explicitly provides that an "acceptance" may be expressed by electronic means, though this is subject to the well-established rule that the offeror can "prescribe the method of communicating acceptance".

Advertising goods on a web page is similar to the display of goods by a shop window. These acts are not considered "offers" in the eyes of the law. They are merely "invitations to treat". The customers who respond to the advertisements are the ones who make "offers". No contract exists if the other party (i.e. the offeree) does not accept the terms of these offers for whatever reasons (e.g. because of the lack of stock or a change of circumstances) or indeed for no reasons at all.

Certain contracts, such as those about rights over land, have to be in writing for them to be legally enforceable. Section 5 of the ETO now provides that an electronic record will be duly recognised as a record "in writing" so long as it is "accessible so as to be usable for subsequent reference".

Section 6 of the ETO further provides that a "digital signature" will be duly recognised as a "signature" for legal purposes so long as it is "supported by a recognised certificate and is generated within the validity of that certificate".

For the purpose of Section 6 of the ETO, "recognised" means "recognised by the Director of Information Technology Services" and any certification authority may apply to the Director (currently Mr. Alan Wong) to become a recognized certification authority.

Further information about the recognition (or otherwise) of digital signatures can be found in the web page of the Government's Information Technology Services Department (ITSD) at the following address: http://www.itsd.gov.hk

The Control of Exemption Clauses Ordinance (Cap. 457) limits the extent to which liabilities can be exempted by way of contract by a business against a person dealing as a consumer. So, for example, Section 7 of the Ordinance provides that "a person cannot by reference to any contract term…exclude or restrict his liability for death or personal injury resulting from negligence."

This Ordinance applies to contracts concluded through the Internet as much as it applies to contracts concluded in more traditional ways. This means that, for instance, international sales contracts are excluded from its operation altogether (Section 16). Therefore a contract of sale concluded through the Internet whereby a Hong Kong customer agreed to purchase, say, a US book from Amazon.com (a retail company whose place of business is in the United States) would not in any event be subject to the Control of Exemption Clause Ordinance.