Electronic contracts are agreements formed and signed online. Electronic communication offers a number of benefits to the contracting parties and various ways of signing contracts have been invented in recent years. We live in times when these types of contracts become more and more important as technological progress pushes further the necessity for the development and modernization of contractual regulations worldwide.
The validity of Electronic Contracts in Singapore
The Electronic Transactions Act explicitly states that “where electronic communication is used in the formation of a contract, that contract shall not be denied validity”. This means that electronic contracts are valid and enforceable as long as they comply with the requirements for standard contracts:
Sending an offer – An offer is a legally binding invitation sent by one contracting party to the other. It can be withdrawn at any time before being accepted by the other party.
Accepting the offer- An offer can be accepted through words or conduct.
Consideration – A consideration is something of value that is to be exchanged between the parties under the contract. A promise contained in an agreement is not enforceable unless it is supported by consideration.
Some matters have been excluded for the scope of the Electronic Transactions Act. They can not be executed electronically:
- The creation or execution of a will;
- Negotiable instruments, documents of title, bills of exchange, promissory notes, consignment notes, bills of lading, warehouse receipts or any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of a sum of money;
- The creation, performance or enforcement of an indenture, declaration of trust or power of attorney, with the exception of implied, constructive and resulting trusts
- Any contract for the sale or other disposition of immovable property, or any interest in such property;
- The conveyance of immovable property or the transfer of any interest in immovable property.
Electronic records in Singapore
An electronic record is any record that is “generated, communicated, received or stored by electronic means in an information system or for transmission from one information system to another.”
Durable and transient electronic information can be legally used as proof for communication between contracting parties. The Companies Act in Singapore also recognizes the use of electronic records. Companies in Singapore can maintain records (such as the register of members) in an electronic form.
Timing & Location of Electronic Contracts
When considering electronic communications it is important to know when certain information is sent and received by the contracting parties. This is even more important for the offer and acceptance.
The time of dispatch of electronic communication is the time when the information was sent out, while the time of receipt is the time where the electronic communication is capable of being retrieved by the addressee at his designated electronic address.
If the email address was not designated by the recipient, the time of receipt is the time when the information can be retrieved and the recipient knows that the message has been sent to their address.
Under the regulations of the Electronic Transactions Act, the location from where electronic communication has been sent or where it has been received are deemed the places of business of the sender and the recipient.
Digital Signatures in Singapore
There is a difference between electronic and digital signatures in Singapore. There is no definition for an electronic signature but it is considered to be any act that demonstrates acceptance, like clicking a checkbox for accepting terms and conditions or a scan of a physical signature.
A digital signature is something else. It involves a digital certificate and an additional security layer by the use of an asymmetric cryptosystem and a hash function.
The Electronic Transactions Act gives electronic signatures and their use the same status as written signatures. However, the ETA states that signature should be:
- Unique to the person using it;
- Capable of identifying the person and;
- Under the sole control of the person using it.