As the world becomes a little oyster with global interconnectivity between persons, and with transactions being carried out across borders and countries through digital platforms all the time, this question inevitably arises, “Can we also enter into binding contracts online where everything including signing of the document is done electronically?”
The general answer to this question is yes. The Kenya Information and Communications Act is quite instructive in addressing this issue. It provides that, in the context of contract formation, an offer and acceptance of an offer may be expressed by means of electronic messages. The Act further provides that any matter that is required to be “in writing” is also satisfied if the matter is made available in an electronic form and remains accessible so as to be usable for a subsequent reference.
Notably, such a document must remain retrievable or accessible for future reference. Various legislations provide for different durations for retention of documents. For instance, Kenyan tax laws provide for a general record retention period of 5 – 7 years while the Companies Act and other Acts provide for a general record retention period of 7 – 10 years.
The Act further provides that for electronic documents to satisfy the requirement for valid retention of documents, the record must be retained in the format in which it was originally generated, sent or received and it must contain details which will facilitate identification of the original destination, date and time of dispatch or receipt of such an electronic record.
Accordingly, it is important to ensure the integrity of the system that you are using for electronic contracting. Similarly, the program must have time-stamping abilities to record things such as the time of generation of the document, time of delivery to the recipient, time when the signature was affixed in addition to the format and content of the document signed.
As regards signing, the law states that where a signature of a person is required, that requirement is met in relation to an electronic message if an advanced electronic signature is used. This is where it gets complicated though, as an advanced electronic signature has a very specific definition.
The Act defines an advanced electronic signature as a signature which:
- is uniquely linked to the signatory;
- is capable of identifying the signatory;
- is created using means that the signatory can maintain under his sole control; and
- is linked to the data to which it relates in such a manner that any subsequent change to the data is detectable.
So, it is not as simple as affixing your scanned physical signature on a document.
The law further provides that such a signature will be deemed reliable if, among other things:
- it is generated through a signature-creation device;
- any alteration to the electronic signature made after the time of signing is detectable; and
- where the purpose of the legal requirement for a signature is to provide assurance as to the integrity of the information to which it relates, any alteration made to that information after the time of signing, is detectable.
Please feel free to reach out to us should you need legal advice or guidance in this area of electronic contracts.