Electronic documents and transactions: Is it as easy as it seems? Part I

As technology is being used far more now and restrain of movement is being promoted, corporates should to invest their time and resources in electronic communications, electronic contracts and electronic signatures

A comment I have often heard amongst bemused lawyers is that there are many laws in the country which facilitate numerous mechanisms for businesses and other organisations, but remain unused. 

I strongly feel that the provisions of the Electronic Transactions Act No. 19 of 2006 and the Electronic Transactions (Amendment) Act No. 25 of 2017 (hereby referred to as the “Act”) would be such a law, whereby organisations definitely could use more technology in order to make their businesses more streamlined and efficient. All definitions given are from the ‘Act’.

The objectives of the ‘Act’ are inclusive of the various provisions that are offered globally. They include to facilitate domestic and international electronic commerce by eliminating legal barriers and establishing legal certainty, to encourage the use of reliable forms of electronic commerce, to facilitate ministries, government bodies and courts to accept forms, documentations and other applications ‘by means of reliable forms of electronic communications’ and also to promote public confidence in ‘the authenticity, integrity and reliability of data messages, electronic documents, electronic records or other communications’

Data messages, electronic documents and electric records and other communication

What are the reasons for organisations to hesitate in using more electronic based communications? It is by far a more efficient, user friendly and environmentally friendly means. One reason could be uncertainty in legal recognition. However the ‘Act’ does give effect to such communication, as per the definitions below.

‘Data message’ means information generated, sent, received or stored by electronic, magnetic, optical, or other similar means;

‘Electronic’ means information generated, sent, received or stored by electronic, magnetic, optical, or similar capacities regardless of the medium.

‘Electronic document’ includes documents, records, information, communications or transactions in electric form;

‘Electronic record’ means a written document, or other record created, stored, generated, received, or communicated by electronic means;

‘Electronic communication’ means any communication made by means of data message;

Further, section 3 of the ‘Act’ clearly states that ‘no data message, electronic document, electronic record or other communication shall be denied legal recognition, effect, validity or enforceability on the ground that it is in electronic form.’

The ‘Act’ does address instances where it is required for documents to be in its original form and being retained in the proper manner. Section 5 stipulates that if there exists ‘a reliable assurance as to the integrity of the information from the time when it was first generated in its final form as a data message, electronic document, electronic record or other communication’, notwithstanding the legal requirement for information to be presented or retained in its original form, that requirement is satisfied by it being presented by means of a data message, electronic document, electronic record or other communication.’ Section 5 (2) does give some guidelines however, with regard to the above statement. Firstly, the information thus presented needs to have remained ‘complete and unaltered’, apart from additional changes that are bound to happen ‘in the normal course of communication, storage or display’. Secondly, also the purpose of generation of the information must be examined in assessing the reliability.

Section 6 of the ‘Act’ further explains the requirements for retention. Even if the information was not originally generated in electronic form, the requirement by any law that information is retained can be satisfied by doing so in electronic form, of information contained in a data message, electronic document, electronic document or other communication. However there are three factors that need to be complied with. 

Firstly, the information in electronic form needs to be accessible in order to be usable for future reference. Secondly, the information in electronic form has to be retained in the very format it was generated, sent or received or in a format which is an accurate representation of the information thus generated, sent or received. Thirdly, such information must enable the identification of the origin and destination of the information in electronic form; also the date and time when such information was generated, sent or received must be retained. It is imperative that all the above conditions are complied with.

Electronic signature

‘Electronic signature’ means data in electronic form, affixed to logically associated with a data message, electronic document, electronic record or communication which may be used to identify the signatory in relation to the data message, electronic document, electronic record or communication and to indicate the signatory’s intention in respect of the information contained therein.

The ‘Act’ recognises electronic signatures under section 7. In all simplicity it states that if any law requires the signature of a person then that requirement is deemed to be met in relation to a data message, electronic document, electronic record or communication, unless there was a specific opposition. 

However, in section 7 (b) (i) and (ii) there are some conditions which are imperative in the usage of the above. Nevertheless, in short, when using an electronic signature there should be no ambiguity in relation to the person concerned and the reasons for which the signature was used. For example, in an organisation, a Director or a CEO might very well sign a business contract and their designation should be mentioned clearly. 

Conclusion 

There are limitations to the applicability of the ‘Act’. Section 23 clearly states that instruments such as wills, powers of attorney, a contract of sale for immovable property and foreign exchange transactions to name a few do not come within the purview of this Act. So before starting to get ‘digital’, it would be prudent to examine the limitations given. 

Nevertheless, as technology is being used far more now and restrain of movement is being promoted, I would strongly advocate corporates to invest their time and resources in electronic communications, electronic contracts and electronic signatures.

[The next article will address ‘Electronic Contracts’ and ‘Rules Governing Evidence’ as per the provisions under the ‘Act’. If you need any further information or advice, please contact the author – LL.B (Hons.) (Warwick); LL.M (Lon.), Barrister (of Lincoln’s Inn); Attorney-at-Law – on [email protected].]