The pre requisite for an electronic commerce transaction to be enforceable Ever wonder what are the pre-requisites for an electronic commerce transaction to be enforceable? Jillian Chia explains … INTRODUCTION
Due to the rapid growth of electronic commerce in recent times, there has been a surge in the usage of the internet for business transactions. Commercial transactions such as banking transactions and the purchase of goods and services are now frequently performed over the internet and other computer networks. Furthermore, communication via e-mail is now commonplace in the commercial world. In line with this development, the Electronic Commerce Act 2006 (“the Act”) was enacted and came into force on 19th October 2006. The Act seeks to “provide for legal recognition of electronic messages in commercial transactions, the use of the electronic messages to fulfil legal requirements and to enable and facilitate commercial transactions through the use of electronic means”. APPLICATION OF THE ACT
The Act does not make it mandatory for commercial transactions to be conducted electronically. It applies to situations whereby a person consents to using, providing or accepting an electronic message in a commercial transaction. Such consent may be inferred from the person’s conduct. The scope of the Act also covers electronic commercial transactions carried out by the Federal and State Governments. However, the Act does not apply to certain transactions or documents, namely (1) power of attorney, (2) creation of wills and codicils, (3) creation of trusts, and (4) negotiable instruments. ‘Electronic’ and ‘electronic messages’ are respectively defined under the Act as:- “the technology of utilizing electrical, optical, magnetic, electromagnetic, biometric, photonic or other similar technology” “information generated, sent, received or stored by electronic means”. Commercial transactions are defined as:-“a single communication or multiple communications of a commercial nature, whether contractual or not, which includes any matters relating to the supply or exchange of goods or services, agency, investments, financing, banking and insurance”. By virtue of the Act, information that is wholly and/or partly in electronic form is now legally recognised. Furthermore, information that is merely referred to in an electronic message has also been granted legal effect. This is provided the said information is accessible to the person against whom that information might be used. For example, a document attached and referred to in a commercial transaction via e-mail, will be legally effective as long as the receiver of that e-mail has access to that document.
FULFILMENT OF LEGAL REQUIREMENTS BY ELECTRONIC MEANS
The enforcement of this Act affirms the legal validity of commercial transactions conducted by electronic means. The formation of a contract and the communication, acceptance and revocation of proposals can now be expressed by electronic messages and are legally binding. The usual elements of commercial transactions (i.e. the contract be in writing, be signed or sealed, be in original form, be retained, be in a prescribed form, be served and delivered) can now be fulfilled by electronic means. If there is a requirement for any information to be in writing, information in an electronic message that is accessible and intelligible for subsequent reference, will now suffice to fulfil that requirement. The notion that one has to physically put pen to paper to sign a contract is now a thing of the past. The Act recognises “any letter, character, number, sound or symbol or any combination thereof created in electronic form adopted by a person as a signature” as an electronic signature and the Act goes on to stipulate that if the document is in the form of an electronic message, it can now be executed by an electronic signature. However, this is subject to conditions that the electronic...