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COVID-19: The “New Normal” In Electronic Signature

The Covid-19 pandemic is unlike anything that could have been predicted and it has a profound impact on businesses globally. Given the governmental measures and restrictions promulgated by the Prime Minister of Malaysia, including the nearly 1 month Movement Control Order (“MCO“), this has placed constraints on businesses, causing them to review their standard working practices and to consider alternative options to carry on with their business activities.

Taking a cue from the Prime Minister of Malaysia, we have to live with a “new normal” way of living. The “new normal” would include how businesses operate especially how transactions and deals are concluded. Physical distancing and working from home are definitely going to be the new normal.

The question is, when contracting parties are separated by location, are we really ready to substitute the traditional ‘pen to paper’ signature with often fanciful stylised depiction of someone’s name, nickname, or even a simple X with an electronic signature?

Whilst this may be the usual practice of some organisations, however, for many others, the use of an electronic signature will raise concerns with regard to the possible abuse or fraud, as well as the validity and legal enforceability of the signature process.

A quick look at the Electronic Commerce Act 2006 (“ECA 2006“) will tell you that we already have in place an Act which provides for legal recognition of electronic messages (i.e. information generated, sent, received or stored by electronic means) in commercial transactions. The ECA also defines an electronic signature as “any letter, character, number, sound or any other symbol or any combination thereof created in an electronic form adopted by a person as a signature“.

Of course, the recognition of an electronic signature requires it to be attached, or logically associated with the electronic message; it must adequately identify the person and sufficiently indicate the person’s approval of the information to which the signature relates; and it must be as reliable as is appropriate given the purpose for which, and the circumstances in which, the signature is required (see Section 9 of the ECA 2006). Reliable further entails another round of assessment of control and detectability of alteration to the electronic signature and document after the time of signing.

The Federal Court had decided in Yam Kong Seng & Anor v Yee Weng Kai [2014] 4 MLJ 478 that even a simple SMS could fulfil the legal requirement for a signature. The Federal Court went on to elaborate that ‘Signatures need not be written. Suffice if there be any mark, written or not, which identifies the act of the party, perhaps in the form of mark or by some distinguishing feature peculiar only to that person, then the acknowledgment has been signed’. The Federal Court made an analogy that the conventional paper can be substituted by the mobile phone, which holds features that can preserve information or transmissions in the like of an SMS, with the telephone number representing the caller or the sender of some message. ‘It is the norm nowadays to substitute the number of an identified person with his name to assist instant recognition’.

The new normal is actually not that new but the current conditions pursuant to the MCO certainly reignite the need to take a look at how technology and commerce may be married. Once this is done, we should not stop here. The development from ‘pen to paper’ to electronic documents and signatures will certainly pave the way to various efficient innovations such as smart contracts.

This article is intended for general information of the clients of our Firm. It should not be regarded as legal professional advice. If you need advice based on specific facts, please feel free to contact us.

 

Dr. Syed Adam Alhabshi (CPIF)

Partner

[email protected]

Apple Gam Peih Fenn

Associate

[email protected]

 

Kimberley Yee Song Zhi

Associate

[email protected]

 

 

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