Legal Definitions - electronic transaction

An electronic transaction is an agreement or exchange that is formed primarily through digital communications, where the messages exchanged between parties are processed automatically without requiring a human to review them as a necessary step before the contract is finalized. In essence, the binding agreement is created by systems responding to electronic signals, rather than by individual human oversight of each specific message.

Here are some examples to illustrate this concept:

• Online Retail Purchase: When a customer visits an e-commerce website, adds items to their shopping cart, proceeds to checkout, enters their payment details, and clicks "Place Order," they are engaging in an electronic transaction. The website's automated system immediately processes the order, charges the customer's credit card, and sends an order confirmation. No employee of the online store manually reviews the customer's specific "Place Order" message before the contract for the sale of goods is formed; the system itself accepts the offer and creates the binding agreement.

• Software License Acceptance: Imagine you download a new application to your computer or phone. During the installation process, you are often presented with an End-User License Agreement (EULA) and prompted to click an "I Agree" button to continue. By clicking this button, you are electronically accepting the terms of the license. The software company's system does not have an individual reviewing your specific click before granting you access to the software; the agreement is formed automatically by your electronic indication of consent.

• Automated Utility Bill Payment: Many people set up automatic bill payments with their utility providers (electricity, internet, water). They provide their bank details once and authorize the utility company to automatically deduct the bill amount each month. Each month, when the utility company's system sends an electronic request to the customer's bank for payment, and the bank's system processes it, this constitutes an electronic transaction. No human at the utility company or the bank reviews the specific payment request message before the funds are transferred; the transaction occurs based on pre-authorized electronic instructions.