Electronic Records & Signatures: Electronic Commerce Act -1998

Electronic Commerce Act - 1998

Part II - Electronic Records and Signatures Generally

6. Legal Recognition. Except as provided in Section 4 of this Act, records and signatures shall not be denied legal effect, validity or enforceability solely on the ground that they are in electronic form.

Source: UNCITRAL Model Law, Article 5.

Comments: This section sets forth the fundamental principle that electronic records and electronic signatures should not be denied legal recognition or evidentiary weight solely by virtue of the medium chosen.

7. Requirements of Writing. Except as provided in Section 4, where any rule of law requires any matter to be in writing, that requirement sufficiently is met by an electronic record if the matter contained therein is accessible so as to be usable for subsequent reference.

Source: UNCITRAL Model Law, Article 6.

Comments: Statutes and regulations frequently require that certain documents must be "written" or "in writing." The principle of requiring agreements to be memorialized in a writing has presented obstacles for electronic transactions. Traditionally, the use of "writings" in a paper-based environment: (1) ensures that there would be tangible evidence of the existence and nature of the intent of the parties to bind themselves; (2) fosters awareness of the consequences of entering into a contract; (3) provides a permanent, unaltered record of a transaction; (4) allows for the reproduction of a document so that each party would hold a copy of the same date; (5) serves as an indicator of the final intent of the author of the "writing" and provides a record of that intent; (6) permits the storage of data in a tangible form; and (7) brings into existence legal rights and obligations in those cases where a "writing" was required for validity purposes. The focus of this section as it relates to electronic transactions is to legally recognize the use of electronic "writings" through e-mail, EDI, the Internet and other electronic records transmitted over networks in electronic contracting.

8. Electronic Signatures. Except as provided in Section 4, where any rule of law requires that a record bear a signature, or provides for certain consequences if a record is not signed, an electronic signature satisfies that rule of law if:

(a) a method is used to identify the originator and to indicate the originator’s approval of the information contained in the electronic record; and

(b) that method is as reliable as was appropriate for the purpose for which the electronic record was generated or communicated, in light of all of the circumstances, including any relevant agreements among the parties involved.

Source: UNCITRAL Model Law, Article 7.

Comments: This section clarifies existing law by expressly stating that, except for limited delineated exceptions, electronic signatures meet legal signing requirements wherever they exist. It is intended to remove any doubt regarding the enforceability of electronic signatures. In a paper-based environment, written signatures acknowledge the signer’s identity and his or her intent to be bound by the terms in the signed agreement. In addition, signed writings serve several practical purposes such as 1) calling the signer’s attention to the legal significance of the signer’s act; 2) expressing the signer’s approval or authorization of the writing; and 3) allowing the document to become attributable to the signer.

With today’s technological developments, open networks such as the Internet are overtaking the traditionally closed environment of paper-based transactions, and communication among parties without previous contacts is commonplace. In this context, the ability to authenticate messages or to ascertain the identity of the author is difficult. Therefore, many fear that business transactions over open networks lack the security and reliability of paper-based equivalents.

This section also addresses the issues of authentication and identification. It focuses on two basic functions of a signature: 1) it establishes the principle that, in an electronic environment, the basic legal functions of a signature are performed by way of a method that identifies the originator of the electronic record and 2) confirms that the originator approved the content of the electronic record. This section may be regarded as establishing a basic standard of authentication for electronic records that might be exchanged in the absence of a prior contractual relationship and, at the same time, to provide guidance as to what might constitute an appropriate substitute for a signature if the parties used electronic communications in the context of an agreement. This provision represents a comprehensive approach to resolving the issue of determining the authenticity and integrity of the electronic signatures. This section follows the UNCITRAL model for establishing criteria that sets forth a method for identifying the author and confirming that the author approved of the contents of the electronic document. The language is broad enough to encompass different methods and technologies and focuses on the issue of reliability.

9. Original Record.

(a) Where a rule of law requires a record to be presented or retained in its original form, that requirement is met by an electronic record if:

(i) there exists reliable assurance as to the integrity of the record from the time when it was first generated in its final form, as an electronic record or otherwise; and

(ii) where it is required that a record be presented, that record is capable of being displayed to the person to whom it is being presented.
(b) Subsection (a) applies whether the requirement referred to therein is in the form of an obligation or whether the law simply provides consequences for the record not being presented or retained in its original form.
(c) For the purposes of subsection (a)(i):
(i) the criteria for assessing integrity shall be whether the information has remained complete and unaltered, apart from the addition of any endorsement and any change which arises in the normal course of communication, storage and display; and

(ii) the standard of reliability required shall be assessed in light of the purpose for which the information was generated and in light of all the relevant circumstances.

Source: UNCITRAL Model Law, Article 8.

Comments: Section 9 addresses rules of law that require documents to be in original form for purposes of ensuring document integrity. It provides that an electronic record (whether or not signed) will constitute an original, provided that there exists a reliable assurance as to the integrity of the information. In a paper-based environment some contract documents are accepted only in original form. This section removes the possibility of parties being forced to use paper documents to complete a transaction by making an electronic record the functional equivalent to a paper original. This section is intended to show that an electronic record will be considered an original so long as it meets the authenticity and reliability requirements set forth in Section 9(c).

10. Admissibility and Evidentiary Weight of Electronic Records and Electronic Signatures.

(a) Nothing in the Indian Evidence Act, 1872 or any rules made under this Act shall apply in any legal proceedings so as to deny the admissibility of an electronic record or an electronic signature into evidence:

(i) on the sole ground that it is an electronic record or an electronic signature; or

(ii) on the grounds that it is not in its original form or is not an original.
(b) Information in the form of an electronic record shall be given due evidentiary weight without regard to the fact that it is an electronic record. In assessing the evidentiary weight of an electronic record or an electronic signature, regard shall be given to:

(i) the reliability of the manner in which it was generated, stored or communicated;

(ii) the reliability of the manner in which its integrity was maintained;

(iii) the manner in which its originator was identified or the electronic record was signed; and

(iv) any other factor that may be relevant.
(c) Nothing in this section shall be construed to affect the provisions of Section 4 of this Act.

Source: UNCITRAL Model Law, Article 9.

Comments: The purpose of this section is to establish the principle that electronic records and electronic signatures should be admissible as evidence in legal proceedings. In addition, this section sets forth a standard for determining the evidentiary weight of electronic records and electronic signatures. It is important to recognize that electronic records and electronic signatures can be used in legal proceedings because such legal recognition removes any legal uncertainty that may occur in disputes over electronic transactions. This section does not establish the requirements for the admissibility of electronic records or electronic signatures into evidence. Rather, it simply provides that a court cannot refuse to admit an electronic record or electronic signature into evidence solely on the ground of its electronic format or on the ground that it is not an original. This section does not, however, mandate the admissibility of an electronic record or an electronic signature in the event of other proper objections such as relevance or lack of authenticity. It merely mirrors the fundamental principle expressed in Section 6 that electronic records should not be discriminated against solely on the nature of the medium chosen.

11. Retention of Electronic Records.

(a) Where any law for the time being in force requires that certain documents, records or information be retained, whether permanently or for a specified period, that requirement is satisfied by retaining them in the form of electronic records if the following conditions are fulfilled:

(i) the electronic record and the information contained therein remains accessible so as to be usable for subsequent reference;

(ii) the electronic record is retained in the format in which it was originally generated, sent or received, or in a format which can be demonstrated to represent accurately the information originally generated, sent or received; and

(iii) such information as enables the identification of the origin and destination of an electronic record and the date and time when it was sent or received, if any, is retained.
(b) An obligation to retain documents, records or information in accordance with subsection (a) shall not extend to any data the sole purpose of which is to enable the record to be sent or received.
(c) It shall be lawful for a person to satisfy the retention requirement referred to in Section 11(a) by using the services of any other person, if the conditions in Sections 11(a)(i) through (iii) are complied with.
(d) Nothing in this section shall preclude any department or ministry of the Central Government, State Government or a statutory corporation under Central or State Government from specifying additional requirements for the retention of electronic records that are subject to its jurisdiction.
Source: UNCITRAL Model Law, Article 10; Illinois Electronic Commerce Security Act, Section 5-135.

Comments: This section sets forth the basic rules regarding the retention of electronic records. It applies to the retention of records that originally exist in electronic form, as well as to the electronic retention of records that originally exist in paper form or on other tangible media. This section also makes it clear that the standards set forth here are minimum standards only; it does not preclude a government agency from establishing additional requirements for the retention of records required under the regulations of that agency.