1. What should I be aware of before making a contract with others through the Internet?

1. What should I be aware of before making a contract with others through the Internet?

According to section 17 of the Electronic Transactions Ordinance (Cap. 553 of the Laws of Hong Kong), contracts can be made by means of electronic records (such as e-mails) unless otherwise agreed by the contracting parties. In addition, electronic records that can be accessed for subsequent reference are allowed as evidence in court proceedings, except those that are set out in schedule 1 to the Electronic Transactions Ordinance such as wills, power of attorney, contracts for sale of land or real estate and mortgages.

If the contract requires the signatures of the parties (but does not involve government organisations), then the parties can use any form of electronic signature that is reliable, appropriate and agreed by the recipient of the signature. For example, the parties may sign a hard copy, scan the document into a computer and then send it via e-mail. If the contract involves government or banking services, the parties must use "digital signatures", which are supported by a recognised certificate that is issued by the Postmaster General. For more information about digital signatures, please go to the website of the Hongkong Post.

If a contract is made between two persons or companies in different countries over the Internet, then that contract will be enforced by the law of the place with the closest connection to the contract (* note). In terms of taxation, the tax law of the place where the profits are made will apply (unless otherwise stated). For example, if you ship your goods to Japan and sell them there, then you will be liable for Japanese tax. However, this is only the basic rule. You should consult an expert in that field before proceeding with such business.

(* Note: In determining which place has the closest connection to the contract, the common law generally takes the following factors into consideration: the place of contracting, the place where the contractual duties are performed, the places of residence or businesses of the parties, and the nature and subject matter of the contract. However, the courts stress that these factors are not exhaustive, and that any other factors which are relevant to the contract may also be considered. You should therefore seek legal advice if there is a query or dispute.)

Care must also be taken when submitting personal information through the Internet. The Personal Data (Privacy) Ordinance (Cap. 486) provides for specific controls over the use of the data by merchants and the rights of consumers to access their own data. You can obtain more information concerning this matter from the Personal Data Privacy topic.