Legal Recognition of Electronic Records and Electronic Signatures

Sections 3 and 3A: what an electronic signature is

Section 3 was the original provision and deals with the digital signature: authentication of an electronic record by affixing a digital signature, effected by the use of an asymmetric crypto system and hash function which envelop and transform the initial record into another record. In outline, the signatory holds a private key which is used to create the signature, and anyone may verify it using the corresponding public key. The two keys form a key pair, and section 3 provides that the private key and the public key are unique to the subscriber and constitute a functioning key pair.

Section 3A was inserted by the 2008 amendment and widens the concept. A subscriber may authenticate any electronic record by an electronic signature or electronic authentication technique which is considered reliable and is specified in the Second Schedule. The section then states when such a technique is considered reliable, in substance:

• the signature creation data or authentication data are, within the context in which they are used, linked to the signatory and to no other person;
• they were, at the time of signing, under the control of the signatory and of no other person;
• any alteration to the electronic signature after affixing is detectable;
• any alteration to the information made after its authentication is detectable; and
• it fulfils such other conditions as may be prescribed.

The Central Government may add to or omit from the Second Schedule by notification, provided no technique is added unless it is reliable.

Why the 2008 change matters. The Act as enacted in 2000 tied recognition to one technology, the asymmetric crypto system. Technology moved. Section 3A converts the Act from a technology specific statute into a technology neutral one: any technique that satisfies the reliability tests and is listed in the Schedule qualifies. The same amendment substituted "electronic signature" for "digital signature" throughout, which is why an older textbook's wording differs from the Act you are reading.

Section 5: legal recognition of electronic signatures

"Where any law provides that information or any other matter shall be authenticated by affixing the signature or any document shall be signed or bear the signature of any person, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied, if such information or matter is authenticated by means of electronic signature affixed in such manner as may be prescribed by the Central Government."

The Explanation defines "signed" for this purpose as affixing a person's handwritten signature or any mark on any document, with "signature" construed accordingly. So the section is measuring the electronic method against the traditional one, and deeming the traditional requirement met.

Note the qualification: affixed in such manner as may be prescribed. Section 5 is not satisfied by any electronic mark whatever. It requires the prescribed manner, which links back to sections 3 and 3A and to the rules made under the Act.

A worked example

A supplier and a buyer conclude a contract for the supply of packaging material entirely by email, each confirming the terms from an official address. No signature of any kind is affixed. A dispute arises and the buyer says the contract is unenforceable.

Take the objections one at a time:

• "It was not in writing." First ask: does any law require this contract to be in writing? For an ordinary contract for the sale of goods, no. So section 4 is not even needed. If the contract had been one required by some statute to be in writing, section 4 would answer it, provided the emails are accessible so as to be usable for subsequent reference, which ordinary stored email is.
• "It was not signed." Again ask first whether any law requires it to be signed. For an ordinary commercial contract, no. Section 5 would answer it if some law did, but only if an electronic signature was affixed in the prescribed manner. Typing your name at the end of an email is not an electronic signature under section 3A, because it is not a technique specified in the Second Schedule and does not satisfy the reliability tests.
• "It was made electronically." Section 10A answers this directly, and is the subject of the next chapter but one.

Now change one fact: the parties used an arbitration clause. An arbitration agreement is required by the Arbitration and Conciliation Act 1996 to be in writing, and that Act itself provides that an agreement contained in an exchange of communications including electronic means satisfies the requirement. Section 4 points the same way, and the emails qualify because they are accessible for subsequent reference.

What it does NOT mean

"An electronic record is writing." Section 4 does not say so. It says a requirement of writing is deemed satisfied. The distinction matters wherever some other consequence turns on the word.

"Any electronic record satisfies section 4." Only one that is accessible so as to be usable for a subsequent reference. A record that cannot be retrieved later fails.

"Typing your name is an electronic signature." It is not, unless it satisfies section 3A and is a technique specified in the Second Schedule, affixed in the prescribed manner.

"Digital signature and electronic signature are interchangeable." Digital signature is one species, using the asymmetric crypto system under section 3. Electronic signature is the genus, introduced by section 3A in 2008.

"Sections 4 and 5 make all documents electronically executable." The excluded documents in the Schedule, including wills, powers of attorney, trusts, negotiable instruments other than cheques and contracts for the sale or conveyance of immovable property, remain outside.

Quick revision

• Section 4: requirement of writing deemed satisfied if the matter is (a) rendered or made available in electronic form and (b) accessible so as to be usable for a subsequent reference.
• Section 5: requirement of signature deemed satisfied if authenticated by an electronic signature affixed in the prescribed manner; the Explanation defines "signed" as a handwritten signature or any mark.
• Section 3: digital signature, by asymmetric crypto system and hash function; private key creates, public key verifies, the two are a functioning key pair.
• Section 3A: electronic signature generally, if reliable and specified in the Second Schedule. Reliability: linked to and controlled by the signatory alone, alterations to the signature and to the information detectable.
• Section 3A was inserted by the 2008 amendment, in force 27 October 2009, making the Act technology neutral.
• Both sections work by deeming, so identify the law imposing the requirement first.

Test yourself

1. State the two conditions in section 4. The information must be rendered or made available in an electronic form, and it must be accessible so as to be usable for a subsequent reference.

2. Which is the wider term, digital signature or electronic signature? Electronic signature. Digital signature is one species of it, using the asymmetric crypto system and hash function under section 3.

3. What makes an electronic signature reliable under section 3A? That the signature creation data are linked to the signatory and to no other person, were under his control at the time of signing, that any alteration to the signature or to the information after authentication is detectable, and that any other prescribed conditions are met.

4. A contract is concluded by email and neither party signs. Is it unenforceable? Not on that ground, unless some law required the contract to be signed. For an ordinary commercial contract none does, and section 10A in any event prevents the contract being treated as unenforceable merely because electronic means were used.

5. Why does section 4 speak of a requirement being "deemed to have been satisfied" rather than saying that an electronic record is writing? To avoid redefining "writing" across the whole statute book. Parliament left the other Acts untouched and provided that their requirement is treated as met, which is why both sections begin "Where any law provides".