The Electronic Transactions Act (ETA) (Cap 88) was passed in July 1998 to provide a legal foundation for electronic transactions, which was gaining traction and prevalence. To provide greater flexibility and to keep up with technology changes, the ETA was repealed and re-enacted in July 2010 to align with the United Nations Convention on the Use of Electronic Communications in International Contracts, which was adopted by the General Assembly of the United Nations on 23rd November 2005. This article highlights some of the applications of the ETA to businesses in Singapore.
The ETA states that 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.” Hence, any data stored in an electronic format is considered an electronic record e.g. e-mails, word documents, digital images, websites, etc.
According to the Act, information shall not be denied legal recognition or validity simply on the basis that it is in an electronic format. The Act provides legal recognition to electronic records provided certain conditions are fulfilled.
Where the rule of law requires document or information to be provided in written form, an electronic record satisfies this rule of law if the information contained in the electronic record is available for future reference.
In addition, where the rule of law states that a record must be signed for it to be valid, this requirement is satisfied in relation to an electronic record as long as a method is used to identify a person and indicate his or her intention with respect to the information contained in the record.
Lastly, where the rule of law requires any document, record or information to be retained, this requirement can be fulfilled by retaining the document, record or information in electronic form provided that the following conditions are satisfied:
- The information is accessible and can be used for future reference;
- The electronic records are retained in the form in which they were originally generated, sent or received; and
- The electronic records retain details such as the origin and destination of the records, the date and time when they were sent or received.
Section 11 of the ETA clarifies that contracts can be entered into by way of electronic communication and electronic contracts shall not be denied validity or enforceability on the basis that it was communicated electronically.
It should be noted that the Contract Law in Singapore, which governs the formation of a contract and provides a legal framework for contracting parties, is also applicable to electronic contracts.
As such, electronic contracts are legal provided they follow and apply the general contract laws and the specific rules related to electronic contracts.
Businesses should take note of the following in the ETA when entering into electronic contracts:
- Party Autonomy
Section 5(2)(a) of the ETA states that parties to a contract can exclude the use of electronic records, electronic communication or electronic signatures in any contract by agreement and the parties can impose additional requirements to the form or authentication of the contract or transaction by agreement.
- Despatch and receipt of an electronic communication
An electronic communication is taken to be despatched either at the time it leaves the information system of the sender or at the time it was received. The time of receipt is the time when the receiver can retrieve the electronic communication at the electronic address designated by the receiver.
- Use of automated message systems for contract formation
A contract between an automated message system and a natural person or between any two automated message systems shall not be denied validity or enforceability on the basis that no natural person reviewed or intervened in the actions carried out by the automated message systems or the resulting contract.
Secure Electronic Signatures
Section 8 of the ETA recognises the use of electronic signature if a method is used to identify the person and to indicate the person’s intention in respect of the information contained in the electronic record.
An electronic signature can take the form of a click of an accept button on a website where the user accepts the terms and conditions, signing on a touchscreen with a stylus, or agreeing to any terms and conditions by means of electronic communication such as e-mail, etc.
An electronic signature can be made “secure” under section 18 of the ETA. To do so, parties must either apply a specified security procedure or an agreed form of security procedure.
The procedure must be able to verify that an electronic signature was, at the time that it was made:
- Unique to the person using it
- Capable of identifying the person
- Under the sole control of the person using it
- Linked to the electronic record to which it relates in a manner such that if the record was altered the electronic signature will be invalidated.
Electronic IDs for Government Transactions
The Singapore government introduced CorpPass, a single corporate digital identity for businesses and other entities (such as non-profit organisations and associations), which allows entities to transact with Government agencies online from 1 September 2018. The CorpPass ensures additional security and replaces:
- Singapore Personal Access (SingPass) – a digital ID used by Singapore citizens, permanent residents, EntrePass and Employment Past holders, etc
- e-Services Authorisation System (EASY) – a system which allows businesses and companies to authorise employees or third party to execute any e-services on their behalf.
With the introduction of CorpPass, multiple logins through SingPass and EASY will no longer be necessary. However, local entities without Unique Entity Number (UEN) (e.g. joint ventures, trust funds etc) which are not eligible to use CorpPass and will continue to use their SingPass accounts to transact with the government.
Matters excluded by the Act
Despite the prevalence of electronic contracts and electronic signatures, there are certain matters that cannot be concluded or signed in such a manner. This is outlined in the First Schedule of the ETA. Such matters have been excluded from the provisions of the ETA, which include:
- 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