Lee Chai

Boon
ADVOCATES & SOLICITORS
● Commissioner for Oaths ● Intellectual Property Lawyers
● Corporate & Commercial Lawyers
______________________________________________________________________________________
20th August 2010
Legal update
Electronic
Transactions
Act 2010
Singapore
ratifies
United
Nations
Convention on the Use of Electronic
Communications
in
International
Contracts
This statute was passed on 10 June 2010 and
came into operation on 1 July 2010. It repealed
and replaced the Electronic Transactions Act
(Cap 88 1999 Ed). One of the reasons for the
new legislation was to align the law with the
United Nations Electronic Communications in
International Contracts adopted by the General
Assembly of the United Nations on 23
November 2005.
Singapore signed the
convention on 6 July 2006 and ratified on 7 July
2010. The Convention was itself adopted by the
General Assembly on 23 November 2005, with
the objectives of enhancing legal certainty and
commercial
predictability
in
electronic
communications used in international contracts.
Contracts
formed
communications
by
electronic
Contracts can be effectively concluded by
electronic communications and programmed
computers sending out automated response can
bind parties in a contract for sale.1
Under the Electronic Transactions Act 2010 2,
information shall not be denied legal effect,
validity or enforceability solely on the ground
that it is in form of an electronic record.3
“Electronic record” means a record generated,
communicated, received or stored by electronic
means in an information system or for
transmission from one information system to
another. 4 “Record” means information that is
inscribed, stored or otherwise fixed on a tangible
medium or that is stored in an electronic or other
medium and is retrievable in perceivable form.
5“Electronic”
means relating to technology
having electrical, digital, magnetic, wireless,
optical, electromagnetic or similar capabilities.6
In the formation of contracts, an offer and
acceptance of an offer may be expressed by
means
of
electronic
communications.7
“Electronic
communication”
means
a
communication that the parties make by means
of electronic records.8
“Communication”
includes any statement, declaration, demand,
notice, request, offer or the acceptance of an
offer, that the parties are required to make or
choose to make in connection with the formation
or performance of a contract.9 A contract formed
by using an electronic communication shall not
be denied validity or enforceability solely on the
ground that such communication was used for
that purpose.10
Electronic Record
An electronic record satisfies any rule of law
11 that:
i)
requires any information to be
written, in writing, to be presented in
writing or provides for certain
consequences if it is not, if the
information contained in such
records is accessible so as to be
useable for subsequent reference 12;
ii)
requires a signature 13 or provides
for certain consequences if a
document or a record 14 is not
signed provided that:
(a) a method is used to identify the
person and to indicate that person’s
intention in respect of the information
contained in the electronic record 15; and
1
Lee Chai

Boon
ADVOCATES & SOLICITORS
● Commissioner for Oaths ● Intellectual Property Lawyers
● Corporate & Commercial Lawyers
______________________________________________________________________________________
(b) the method used is reliable16; or
proven to have fulfilled the functions in
sub-paragraph a) by itself or with further
evidence 17.
A declaration of intention or other statement
shall not be denied legal effect, validity or
enforceability solely on the ground that it is in
the form of an electronic communication 18.
Invitation to Treat
A proposal to conclude a contract made through
one or more electronic communications is
considered an invitation to make offers when the
following are satisfied 19:
a) such proposal is not addressed to one
or more specific parties; and
b) such proposal is generally accessible to
parties making use of information
systems 20.
This extends to a proposal to make use of
interactive applications for the placement of
orders through such information systems. 21The
party making the proposal may however indicate
clearly his intention to be bound in the case of
acceptance of his proposal. 22
Contract between automated message
system and natural person
The Act also contemplates a contract formed by
the interaction of an automated message system
and a natural person, or by the interactions of
automated message systems. Such contracts
shall not be denied validity or enforceability
solely on the ground that no natural person
reviewed or intervened in the resulting contract
or in each of the individual actions carried out by
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the
automated
message
systems.
“Automated message system” means a
computer program or an electronic or other
automated means used to initiate an action or
respond to data messages or performances in
whole or in part, without review or intervention
by a natural person each time an action is
initiated or a response is generated by the
program or electronic or other means. 24
Rules on despatch and receipt
The Act also prescribes the time and place of
despatch
and
receipt
of
electronic
communications. 25
Under the Act, the parties may agree to exclude,
derogate from or vary the effect of section 6, 11,
12, 13, 14, 15 or 16 of the Electronic
Transactions Act. 26
Withdrawing an input error in electronic
communication
Under the Electronic Transactions Act 27, where
there is any input error by a natural person in an
electronic communication with the automated
message system of another party, such person
has the right to withdraw the portion of the
electronic communication in which the input
error was made 28 if the following are satisfied:
a) such system does not provide an
opportunity for the natural person to
correct the error 29;
b) the natural person notifies the other
party of the error as soon as possible
after having learned of the error and
indicates that he has made such error 30;
c) the natural person has not used or
received any material benefit or value
from the goods or services (if any)
received from the other party 31.
W here this proviso applies, the right is only to
withdraw the erroneous part of the electronic
communication and not a right to correct the
error. 32
The statute does not provide for the legal
consequences of such withdrawal of a part of an
electronic communication. This would be dealt
with under the applicable laws including
common law that would examine the efficacy of
the remainder of the communication. If the
clarity or contents of the rest of the
communication do not satisfy the requirements
for contract formation, a binding contract will not
2
Lee Chai

Boon
ADVOCATES & SOLICITORS
● Commissioner for Oaths ● Intellectual Property Lawyers
● Corporate & Commercial Lawyers
______________________________________________________________________________________
result. 33
A situation where the s ystem does provide an
opportunity for the natural person to correct the
error would be where the automated message
system provides a ‘confirmation screen’
containing the information initially furnished by
the individual for correction before the
information is received; or where the system
receives the information and send a confirmation
back for the individual furnishing the information
to correct. 34
1 Chwee Kin Keong v Digilandmall.com Pte Ltd [2004] 2
SLR 594, [2004] SGHC 71 at [134] per VK Rajah JC.
2
Electronic Transactions Act 2010 (No 16 of 2010). For
interpretation of a ratified treaty, see art 5 of the Convention
which states that i) regard is to be had to its international
character and to the need to promote uniformity in its
application and the observance of good faith in international
trade (art 5(1)); ii) questions concerning matters governed by
the Convention that are not expressly settled in it are to be
settled in conformity with the general principles on which the
Convention is based. In the absence of such general
principles, such questions are to be settled in conformity with
the law applicable by virtue of the rules of private
international law (art 5(2)).
3
Electronic Transactions Act 2010 s 6 (based on United
Nations
Convention on
the
Use
of Electronic
Communications in International Contracts art 8).
“Information” includes data, text, images, sound, codes,
computer programs, software and databases: s 2(1).
4
Electronic Transactions Act 2010 s 2(1). “Information
system” means a system for generating, sending, receiving,
storing or otherwise processing electronic records: s 2(1).
5
Electronic Transactions Act 2010 s 2(1).
6
Electronic Transactions Act 2010 s 2(1).
7
Electronic Transactions Act 2010 s 11(1) (based on
United Nations Convention on the Use of Electronic
Communications in International Contracts art 8(1).
8
Electronic Transactions Act 2010 s 2(1). For definition
of “electronic record”, see text to note 4.
9
Electronic Transactions Act 2010 s 2(1).
10 Electronic Transactions Act 2010 s 11(2) (based on
United Nations Convention on the Use of Electronic
Communications in International Contracts art 8(1)).
11 This includes any written law: Electronic Transactions Act
2010 s 2(1).
12 Electronic Transactions Act 2010 s 7 (based on United
Nations
Convention on
the
Use
of Electronic
Communications in International Contracts art 9(2)).
“Information” includes data, text, images, sound, codes,
computer programs, software and databases: s 2(1).
According to Explanatory note by the UNICITRAL
Secretariat on the United Nations Convention on the Use of
Electronic Communications in International Contracts para
146, the following terms have these intended meanings: a)
“accessible” is meant to imply the information in the form of
computer data should be readable and interpretable, and
that the software that might be necessary to render such
information readable should be retained; b) “usable” is
intended to cover both human use and computer processing.
13 “Signature” and its grammatical variations means a
method (electronic or otherwise) used to identify a person
and to indicate the intention of that person in respect of the
information contained in a record: Electronic Transactions
Act s 2(1).
14 For definition of “record”, text to note 5.
15 Electronic Transactions Act 2010 s 8(a) (based on
United Nations Convention on the Use of Electronic
Communications in International Contracts art 9(3)).
16 Electronic Transactions Act 2010 s 8(b)(i) which
provides that the method is to be as reliable as appropriate
for the purpose for which the electronic record was
generated or communicated, in the light of all the
circumstances, including any relevant agreement.
17 Electronic Transactions Act 2010 s 8(b)(ii).
18 Electronic Transactions Act 2010 s 12.
19 Electronic Transactions Act 2010 s 14 (based on United
Nations
Convention on
the
Use
of Electronic
Communications in International Contracts art 14).
20 For definitions of “information” and “information system”,
see notes 3 and 4.
21 Electronic Transactions Act 2010 s 14 (based on United
Nations
Convention on
the
Use
of Electronic
Communications in International Contracts art 11).
According to the Explanatory note by the UNICITRAL
Secretariat on the United Nations Convention on the Use of
Electronic Communications in International Contracts para
205, the expression “focuses on what is apparent to the
person accessing the system, namely that it is prompted to
exchange information through that information system by
means of immediate actions and responses having an
appearance of automaticity. It is irrelevant how the system
functions internally and to what extent it is really
automated.,,”)
22 Electronic Transactions Act 2010 s 14.
23 Electronic Transactions Act 2010 s 15 (based on United
Nations
Convention on
the
Use
of Electronic
Communications in International Contracts art 12). This
provision is an enabling provision and should not be
“misinterpreted as allowing for an automated message
system or a computer to be made the subject of rights and
obligations” but should be regarded as treated such
automatically generated messages as originating from the
legal entity or natural person on whose behalf the system
or computer is operated (Explanatory note by the
UNICITRAL Secretariat on the United Nations Convention
on the Use of Electronic Communications in International
Contracts para 213).
24 Electronic Transactions Act 2010 s 2(1).
25 Electronic Transactions Act 2010 s 13. These rules
replaced those rules under section 15 of the Electronic
Transactions Act (Cap 88 1999 Ed) (now repealed) s 15.
The new rules are adopted from the United Nations
Convention on the Use of Electronic Communications in
International Contracts art 10. UNCITRAL took the view
that “it should not attempt to provide a rule on the time of
contract formation that might be at variance with the rules on
contract formation of the law applicable to any given contract
(Explanatory note by the UNICITRAL Secretariat on the
United Nations Convention on the Use of Electronic
Communications in International Contracts para 175). Art 10
is intended to offer “guidance that allows for the application,
in the context of electronic contracting, of the concepts
traditionally used in international conventions and domestic
law, such as “dispatch” and “receipt” of communications”
(para 175). Under the Electronic Transactions Act (Cap 88
1999 Ed) (now repealed), whether the ‘receipt rule’ applied
3
Lee Chai

Boon
ADVOCATES & SOLICITORS
● Commissioner for Oaths ● Intellectual Property Lawyers
● Corporate & Commercial Lawyers
______________________________________________________________________________________
for acceptance by electronic record is not settled: Chwee Kin
Keong v Digilandmall.com Pte Ltd [2004] 2 SLR 594, [2004]
SGHC 71 at [99]; Chwee Kin Keong v Digilandmall.com Pte
Ltd [2005] 1 SLR 502, [2005] SGCA 2 at [29] (affirmed on
appeal). Although there was no ruling on this issue in Chwee
Kin Keong, VK Rajah JC suggested a few reasons for
preferring
the
receipt
rule
including:
(1) e-mail
communication takes place in a relatively short timeframe
and may be seen to be instantaneous or near instantaneous;
and (2) the United Nations Convention on Contracts for the
International Sale of Goods (Vienna Convention) adopts the
receipt rule (through use of the word ‘reaches’) for the
declaration of acceptance or any other indication of intention
(unless there is a contrary intention). The judge questioned
the anomaly of having a receipt rule for the Vienna
Convention contracts and a postal rule for domestic sales.
These same observations would appear to apply to the new
section 13 of the Electronic Transactions Act 2010 (which
itself has two separate notions of receipt: a) at the time when
the electronic communication becomes capable of being
retrieved by the addressee at an electronic address
designated by the addressee (s 13(2)); b) at the time when
electronic communication becomes capable of being
retrieved by the addressee at an electronic address not
designated by the addressee and the addressee becomes
aware that such communication has been sent to that
address (s 13(3))).
26 Electronic Transactions Act 2010 s 5(3). Parties may
agree to exclude the use of electronic records, electronic
communications or electronic signatures in the contract or
transaction, or to impose additional requirements as to the
form or authentication of the contract or transaction: s 5(2).
The Act itself does not apply to i) the creation or execution
of a will; ii) 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 of beneficiary to claim the
delivery of goods or the payment of a sum of money; iii)
creation, performance or enforcement of an indenture,
declaration of trust or power of attorney, except implied,
constructive and resulting trusts; iv) any contracts for the
sale or disposition of immovable property, or any interest in
such property; v) the conveyance of immovable property or
the transfer of any interest in immovable property: Electronic
Transactions Act 2010 s 4 and First Schedule.
27 Electronic Transactions Act 2010 (No (No 16 of 2010).
28 Electronic Transactions Act 2010 s 16(1) (based on
United Nations Convention on the Use of Electronic
Communications in International Contracts art 14). The
party on whose behalf the natural person was acting may
also take steps to rectify the error. The proviso does not
deal with errors made by a computer or machine, as this was
deemed by UNCITRAL to be too complex an issue to which
different jurisdictions may give varying answers (Explanatory
note by the UNICITRAL Secretariat on the United Nations
Convention on the Use of Electronic Communications in
International Contracts para 230). “Input error” refers to
errors relating to inputting wrong data in communications
exchanged with an automated message system for instance,
unintentional keystroke errors: Explanatory Note para 234.
For definitions of “automated message system”. For
definition of “electronic communication”.
29 Electronic Transactions Act 2010 s 16(1).
30 Electronic Transactions Act 2010 s 16(2)(a).
31 Electronic Transactions Act 2010 s 16(2)(b).
UNCITRAL considered that benefit may be received
electronically and instantaneously on the electronic
transaction which would render restoration impossible and
inequitable. Also, mere access to information itself might be
a benefit received that could not be returned even though
the physical medium on which the information was stored
could. It also highlighted the situation when the mistaken
party accepts a consideration that varies in value between
the time of receipt and the first opportunity to return (in which
case restitution would not be an adequate remedy). See
Explanatory note by the UNICITRAL Secretariat on the
United Nations Convention on the Use of Electronic
Communications in International Contracts para 249.
32 UNCITRAL declined to provide in the convention a
general right to correct erroneous communications for the
following reasons: a) it would introduce additional costs for
system providers; b) this remedy would not have an
equivalent in the paper world which discrepancy UNCITRAL
wanted to avoid; c) it would cause practical difficulties as
operators of automated message systems “may more readily
provide an opportunity to nullify a communication already
recorded than an opportunity to correct errors after a
transaction has been concluded”.
33 See Explanatory note by the UNICITRAL Secretariat on
the United Nations Convention on the Use of Electronic
Communications in International Contracts para 241.
34 See Explanatory note by the UNICITRAL Secretariat on
the United Nations Convention on the Use of Electronic
Communications in International Contracts para 233.
by Jeffrey Lee
For further enquiries please email:
jeffreylee@leechaiboon.com
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