How to Legally Use E-Signatures in Singapore Contracts
What are Electronic Signatures?
The Infocomm Media Development Authority defines an electronic signature as:
“An acknowledgement provided in an electronic format that a business can use to demonstrate the intention of a party (e.g., acceptance) and that can electronically be used to authenticate the party involved”.
Electronic signatures are recognised under Singapore’s Electronic Transactions Act 2010 (ETA). Such electronic signatures may be accorded the same legal status as a “wet ink” signature, provided that the following requirements are met:
- The method of signature used must be able to identify the person signing and indicate that person’s intention in respect of the information contained in the electronic record.
- The method of signature used must be:
- As reliable as appropriate for the purpose for which the electronic record was generated or communicated in light of all circumstances, including any relevant agreement; or
- Proven to fulfill the functions described in paragraph (1), by itself or together with further evidence.
The benefits that come along with electronic signatures are undeniable, as documents can be signed with just a mobile device at hand, within a matter of minutes. This is particularly efficient where:
- Signatures from multiple parties are required, such as a shareholders’ or directors’ resolution; or
- Several of the required signatories are situated overseas, where electronic signatures facilitate a fast turnaround and reduction of document delivery costs.
This article will also cover:
What are Digital Signatures?
Digital signatures are a recognised form of an electronic signature, but with more exacting requirements relating to security, involving the use of:
- An asymmetric cryptosystem — a system capable of generating a secure key pair consisting of a private key (to create a digital signature) and a public key (to verify the digital signature); and
- A hash function — an algorithm that maps or translates sequences of computer bits into another set (the hash result) such that:
- An electronic record yields the same hash result every time the algorithm is executed using the same record as input;
- It is computationally infeasible to derive or reconstitute the electronic record from the hash result produced by the algorithm; and
- It is computationally infeasible that 2 electronic records can be found to produce the same hash result using the algorithm.
More specifically, the ETA defines a digital signature as an electronic signature consisting of a transformation of an electronic record such that a person with the initial untransformed electronic record and the signer’s public key can accurately determine:
- Whether the transformation was created using the private key that corresponds to the signer’s public key (i.e. belongs to the same key pair); and
- Whether the initial electronic record has been altered since the transformation was made.
Parties should be aware that if reliance on digital signatures is not reasonable under the above circumstances, then there is a risk that the digital signature will be treated as an invalid signature or authentication.
Must Electronic Signatures Take A Certain Form?
The ETA does not specify a form that an electronic signature must take. Thus, it may take various forms such as:
- A scanned physical signature;
- A drawn signature on an electronic device;
- Clicking “I agree” to terms and conditions on a website; or
- Typing your name at the signature portion of an online form.
However, you may want to also ensure that your electronic signature is “secure”. The key difference between a secure electronic signature and a normal electronic signature is that while both are accorded legal effect under the ETA, only secure electronic signatures are accorded the following presumptions:
- It is the signature of the person to whom it correlates;
- It is affixed by that person with the intention of signing or approving the electronic record; and
- It is authentic and has integrity.
These presumptions are important in disputes over the validity of electronic signatures, as they will automatically apply for secure electronic signatures. The disputing party will then have to adduce evidence to the contrary if it is claiming that the electronic signature is not valid.
What Are The Requirements Before An Electronic Or Digital Signature Is Considered “Secure”?
As briefly mentioned above, a secure electronic signature has several requirements, but essentially, it must meet the following 4 criteria:
- Unique to the person using it;
- Capable of identifying such person;
- Created in a manner or using a means under the sole control of the person using it; and
- Linked to the related electronic record such that if the record was changed, the electronic signature would be invalidated.
In addition to the above, a digital signature must also meet the following criteria to be considered secure:
- Created during the operational period (i.e period from date and time of issue of certificate till its stated expiry, unless earlier revoked/suspended) of a valid certificate (i.e. a record issued for digital signatures, which seeks to confirm the identity/significant characteristics of a person holding a particular key pair) and could be verified by reference to the public key listed in that certificate; and
- The certificate is trustworthy as:
- It was issued by an accredited certification authority in Singapore;
- It was issued by a recognised certification authority;
- It was issued by a public agency approved by the Minister for Communications and Information to act as a certification authority; or
- The parties have expressly agreed between themselves (sender and recipient) to use a digital signature as a security procedure, and the digital signature was properly verified by reference to the signatory’s public key.
What Are The Exclusions To The Usage Of Electronic or Digital Signatures?
Electronic or digital signatures cannot be used for documents relating to the matters below:
- 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, a declaration of trust or power of attorney, with the exception of implied, constructive and resulting trusts;
- Any contract for the selling or other disposition of real estate property, or any interest in such property; and
- The conveyance of or transfer of any interest in real estate property.
Parties should therefore not use electronic or digital signatures for documents relating to the above categories, and should follow their respective signature requirements.
Electronic signatures are now widely used as they are more convenient compared to the usual “wet ink” signatures, which requires one to physically sign the document. However, they may be used for only certain documents.
Further, stringent requirements must also be met before such signatures can be given the same legal effect as “wet ink” signatures, and be enforceable in the event of any dispute over the signature’s validity.
Please do not hesitate to reach out to one of our corporate lawyers if you require advice on whether your document can be signed electronically, or whether an electronic or digital signature used has fulfilled the legal requirements for being considered as valid.
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