Introduction

The use of electronic signatures (e-signatures) has soared in the past few months. This is attributable to the advantages of e-signatures and the physical limitations brought upon businesses by COVID-19.^[1] Despite its prevalence and benefits, questions are still arising regarding the legal requirements of e-signatures and whether they are legally binding in nature. These issues have led some businesses to remain hesitant to conclude transactions using e-signatures.^[2]

This post sets out the legal requirements for e-signatures and addresses their legality based on the  Kenya Information and Communications Act and the Business Laws Amendment Act.

 

What are the legal requirements of electronic signatures?

As per the Kenya Information and Communications Act, e-signatures refer to data in electronic form attached to other electronic data.^[3] The identification of the signatory in relation to the data message and the indication of the signatory’s approval of the information contained in the data message, are the purposes that the e-signature must serve.^[4] Examples of e-signatures include certificate based digital IDs provided by Electronic Certification Service Providers (E-CSPs).^[5] Attaching a picture of one’s signature to electronic data, using a digital signature program, does not suffice as an e-signature. This is because digital signature programs do not identify the signatory in relation to the data message.^[6]

The Act distinguishes between e-signatures and advanced e-signatures. In addition to the characteristics of an e-signature, an advanced e-signature must be;

“uniquely linked to the signatory; created using means that the signatory can maintain under his sole control; and linked to the data to which it relates to in such a manner that any subsequent change to that data is detectable.”^[7]

Between e-signatures and advanced e-signatures, only advanced e-signatures can be applied to any law requiring a person’s signature. For valid application, advanced e-signatures must be considered reliable based on the purposes of the generation or communication of the electronic message (e-message).^[8] An advanced e-signatures is reliable if:

“it is generated through a signature-creation device; the signature creation data are, within the context in which they are used, linked to the signatory and to no other person; the signature creation data were, at the time of signing, under the control of the signatory and of no other person; 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.”^[9]

In addition to the requirements stated above, e-signatures must be verified in order to be relied on as evidence in Kenyan courts.^[10] This specification is met through the provision of the e-signature certificate by the E-CSP or the parties in question.^[11] Persons can now seek the services of foreign E-CSPs (if properly licensed) owing to a recent public notice published by the Communications Authority (CA).^[12]

 

Does the application of advanced e-signatures legally bind parties?

The Kenya Information and Communications Act legally recognises advanced e-signatures.^[13] The Business Laws Amendment Act, that was passed following the COVID-19 pandemic, takes it a notch further by amending various Acts to incorporate e-signatures.

Under the Law of Contracts Act for example, the definition of the word “sign” now includes “by means of an advanced electronic signature”.^[14] The application of advanced e-signatures in contract law could thus be considered legally binding on parties. Its’ legally binding nature prevents parties to the contract from absconding from their obligations under the contract. Nonetheless, should the parties fail to perform their duties under the contract, the affected party can seek reparations under the relevant court.^[15]

E-signatures however, do not apply in every transaction in all areas of law. The Kenya Information and Communications Act restricts the application of e-signatures in the creation or execution of a will and in negotiable instruments.^[16]

It should also be noted that certain jurisdictions do not recognise e-signatures as legally binding. Therefore, if involved in a contract with trans-national aspects, parties should be weary of applying e-signatures.^[17]

 

Conclusion

Further to the aim of the blog post, the legal requirements of e-signatures and the question of their legally binding nature has been addressed. It is clear from the analysis above that e-signatures could be considered legally binding in nature. Businesses and individuals should consequently consider e-signatures as a valid substitute for written signatures.

 

^[1] Mwathe Daniel & John Syekei ‘E-Signature Essentials’ Bowmans Insights, April 2020 https://www.bowmanslaw.com/insights/intellectual-property/e-signature-essentials/ on 27 September 2020.

^[2] Mwathe Daniel & John Syekei ‘E-Signature Essentials’ Bowmans Insights, April 2020 https://www.bowmanslaw.com/insights/intellectual-property/e-signature-essentials/ on 27 September 2020.

^[3] Section 2, Kenya Information and Communications Act (Act 2 of 1998).

^[4] Section 2, Kenya Information and Communications Act (Act 2 of 1998).

^[5] Centre for Intellectual Property and Information Technology Law, Emerging Issues in Digital ID: Digital Signatures, 2020, 2.

^[6] Centre for Intellectual Property and Information Technology Law, Emerging Issues in Digital ID: Digital Signatures, 2020, 2.

^[7] Section 2, Kenya Information and Communications Act (Act 2 of 1998).

^[8] Section 83O (1), Kenya Information and Communications Act (Act 2 of 1998).

^[9] Section 83O (2), Kenya Information and Communications Act (Act 2 of 1998).

^[10] Section 106C, Evidence Act (Act 46 of 1963).

^[11] Section 106D, Evidence Act (Act 46 of 1963).

^[12] Public Notice, Recognition of Foreign Electronic Certification Service Providers, Communications Authority of Kenya, 1 September 2020.

^[13] Section 83P, Kenya Information and Communications Act (Act 2 of 1998).

^[14] Section 2, Business Laws (Amendment) Act (Act. No. 1 of 2020).

^[15] ‘Binding vs. Non-Binding Contracts’ Law Depot, April 2020 https://www.lawdepot.com/blog/binding-vs-non-binding-contracts/ on 28 September 2020.

^[16] Section 83B (1), Kenya Information and Communications Act (Act 2 of 1998) & Section 14, Business Laws (Amendment) Act (Act. No. 1 of 2020).

^[17] Mwathe Daniel & John Syekei ‘E-Signature Essentials’ Bowmans Insights, April 2020 https://www.bowmanslaw.com/insights/intellectual-property/e-signature-essentials/ on 29 September 2020.

Photo: ©Fabrega Molino