Legal recognition of electronic transactions
Sunil D B Abeyaratne
BASL Secretary and IT Committee Chairman of the Colombo Law Society
Electronic transactions are carried over electronic medium (eg the
Internet) while their counterpart, traditional commercial transactions
take place using paper based medium.
Sunil D B Abeyaratne |
There is no doubt that the entire world tends to maintain
documentation electronically due to its involvement of low cost, less
storage space for storing and the availability of facilities to enter
into contracts even without meeting or having a conversation with each
other from different parts of the world.
Further, considering its availability, convenience, involvement of
low cost and time factor, transactions over Virtual Private Networks (VPN)
are becoming popular day by day.
As a result, majority of business transactions in the world have
taken place under e-Commerce and consumers prefer to enter into online
purchasing with the development of internet.
Since there should be a legal acceptability, adoption and recognition
of electronic transactions, the United Nations Commission on
International Trade (UNCITRAL) made the General Assembly Resolution
51/162 of 16.12.1996 which guided to enact the Model Law on Electronic
Commerce (1996).
Accordingly, most of the member countries have adopted laws to
recognize electronic transactions like its counterpart traditional
contracts without any difference. As a result, Sri Lanka also has
enacted the Electronic Transactions Act No. 19 of 2006 following the
said Model Law.
Legal recognition of electronic documents
To accept any documents as a reliable document before Law, the same
must be in writing and authenticated. If the e-document is capable to
fulfill the said requirements, it will be admissible irrespective of the
medium of such document. However, different countries have given
different level of recognition for electronic documents.
Position in Sri Lanka
Electronic messages very often cross borders of countries |
According to Section 18 of the Prevention of frauds Ordinance in Sri
Lanka; a document must be reliable to be legally accepted. Further,
Legislature in Sri Lanka enacted the Electronic Transactions Act No 19
of 2006 mainly to recognize and facilitate for electronic commerce and
to encourage both public and private sectors to promote electronic
transactions avoiding disputes over the admissibility of e-documents and
matters relating to e-transactions like in some other countries.
Accordingly, electronic documents like e-mails and short messages (SMS)
are admissible as valid documents in Sri Lanka.
However, there are certain restrictions on application of Electronic
Transactions Act as specified under section 23 of the Act.
Authenticity of an electronic document in Sri Lanka
Section 18 of the Prevention of Frauds Ordinance requires the
signature of the maker of the document to prove its reliability. This is
not new to the legal system in this country or elsewhere in the world.
There are two ways to authenticate a document in electronic
transactions (I) by authentication according to provisions in a contact
between parties and (ii) authentication through third party records.
Provisions on cryptography, encryption, digital signatures,
Certification Authority and certification of Service Providers those are
relevant to authentication and security of e-documents have been
provided under the said-transactions Act.
Other important provisions relevant to Electronic Transactions Act
in Sri Lanka
(i) Section 8 of the Electronic Transactions Act explains the use of
electronic records and electronic signatures in Government Institutions
and statutory bodies.
(ii) Chapter III of the Electronic Transactions Act explains the
governing law for acknowledgment of receipt of electronic message,
document or other communication relevant to Electronic Contracts.
(iii) Section 14 of the Act explains how to decide the time and place
of dispatch and receipt of electronic records.
Differences on legal issues between e-commerce and traditional
commerce
There are some universally accepted and established principles
governing the law of contracts. Though there are lots of similarities
between these counterparts, one has to face practical difficulties when
the concepts under traditional contracts apply on e-commerce as they
are.
There may be instances in which some modifications of traditional
principles are needed for electronic transactions.
Electronic messages very often cross borders (of countries). There
may be various theories applied by different jurisdictions on formation
of a contract, applicable law, agreed terms by parties to the
e-agreement and finally, jurisdictions to institute actions when there
is a violation of such contract under e-commerce.
E-tailers’ advertising on the Computer screen shall be considered as
‘an invitation to treat’ and not as an offer unless otherwise agreed by
the parties to the contract. The computer operator has to make an offer
for goods or services by clicking ‘I Accept’ button and icon or click
wrap agreement.
Thereafter, the e-trailer (advertiser) will have to accept or refuse
(directly or indirectly) the offer.
Value of goods or services advertised by e-tailers, target groups or
jurisdictions of such advertisements, financial risk on non-performance
by ‘offerer’ or ‘offeree’ must be evaluated by look and feel of the
website.
Under the Electronic Transactions Act in Sri Lanka, the law
recognises expression of an ‘offer’ and ‘acceptance’ in electronic form.
Making of payments under online transactions
Parties can decide and agree on ‘the mode of payment’ even under
e-Commerce like in traditional trade and commerce.
However, when there is no such agreement there are number of
directions introduced by some countries dealing with this issue.
Risk involved in online payment
Consumers in most of the countries including Sri Lanka use to make
payments using credit cards under online transactions. Such electronic
transactions are vulnerable to intrusions by hackers and crackers and
such payments are always under major security risk to the credit
cardholder.
Further, a country like Sri Lanka does not have directions enforced
for online transactions and there is no way to cancel or return the
payment after the acceptance of goods or services.
Legal remedies available against breach of e-contracts
Aggrieved party can complain to the Consumer Protection Authority,
institute of actions against unlawful enrichment, take actions under the
‘provisions of Payment Devices Frauds Act No. 30 of 2006, Computer Crime
Act No. 24 of 2007 and Provisions under Payment and Settlement Systems
Act, No. 28 of 2005’.
Preventive steps to be taken under e-commerce and e-transactions in
Sri Lanka
It is always safe to have clear conditions agreed by the parties to
the contract specifying the way to confirm transactions, applicable law
to the contract, mode of payment and jurisdictions of courts under
dispute resolution and so on. |