Overview of eSignature Legality in Malaysia
Malaysia has legally recognized electronic signatures on contracts since 1997, starting with the The Digital Signature Act [Act 562] and later with the 2000 Electronic Commerce Act.
The Electronic Commerce Act defines that any information shall not be denied legal effect, validity or enforceability on the ground that it is wholly or partly in an electronic form.
Electronic Signature Law
Electronic Commerce Act provides for legal recognition of electronic messages in commercial transactions
Are eSignatures legal, admissible, and enforceable?
Yes.
Summary of Law
An eSignature is broadly defined 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.” Some attributes of an e-signature:
- It should be attached to or logically associated with the document
- It should adequately identify the signer and his approval of the information to which the signature relates
- It is as reliable as is appropriate given the purpose and circumstances for which the signature is required
- To demonstrate fulfilment of the reliability test above, three further conditions need to be met
- The means of creating the electronic signature is linked to and under the control of the signer only
- Any change to the e-signature post signing is detectable
- Any change to the document post signing is detectable
All the contracts are by and large valid if legally competent parties reach a consensus, whether they agree verbally, electronically or in a physical paper document (This is as per definition of Contracts Act 1950 and applicable common law). Electronic Commerce Act 2006 ("ECA") states that all agreements and contracts cannot be denied enforceability solely because they are done electronically. In case a dispute ever arises in the future to prove a valid contract, agreement parties may have to present evidence in court. Leveraging digital transaction management solutions like eSignature, parties can provide electronic documentation which may be permissible in evidence under the Evidence Act 1950, to support the authenticity and valid acceptance of a contractual agreement.
Key Restrictions
According to the Electronic Commerce Act, eSignatures shall not apply to the following transactions or documents:
- Power of attorney
- The creation of wills and codicils
- The creation of trusts
- The creation of trusts
- Share transfer forms or instruments giving effect for deal with real property (Currently being tested in court)
