Electronic Commerce Act 2006

Due to the rapid growth of electronic commerce in recent times, there has been a surge in the usage of the internet for business transactions. Commercial transactions such as banking transactions and the purchase of goods and services are now frequently performed over the internet and other computer networks. Furthermore, communication via e-mail is now commonplace in the commercial world.

In the line with this development, the Electronic Commerce Act 2006 (“the Act”) was enacted and came into force on 19th October 2006. There are three main objectives regarding the enactment of this Act which is to reaffirm the validity and legal effect of transactions by electronic means, to remove legal obstacles to e-commerce and to provide certainty in electronic communication. (An Overview on Electronic Commerce Act 2006, Aruna Kumaran, Senior Assistant Secretary Policy and Planning Division Ministry of Domestic Trade and Consumer Affair)

The scope of the Act also covers electronic commercial transactions carried out by the Federal and State Governments. However, the Act does not apply to certain transactions or documents, namely (1)power of attorney, (2)creation of wills and codicils, (3) creation of trusts, and (4)negotiable instruments.

Furthermore, the Act also contains provisions setting out how to determine the ‘who, what, where and when’ of an electronic message. Or in other words, this Act is mainly about procedures in operating the online transactions or e-commerce.

Who?

An electronic message is deemed to be sent by the originator of the message if it is sent by a person who has the authority to act on behalf of the originator in respect of that message or if the message is sent by an information processing system programmed by, or on behalf of the originator to operate automatically.The notion that one has to physically put pen to paper to sign a contract is now a thing of the past.

A person who receives an electronic message is entitled to regard the message as being that of the originator except in instances where he has received notice from the originator that the message was not sent by him or the addressee knew or should have known that the message was not sent by the originator had he exercised reasonable care.

What?

What exactly did the originator of the message intend to send? Under the Act, there is a presumption that the electronic message is what the originator intended to send, and the addressee can act on that presumption unless the originator can show that the addressee knew or should have known that the electronic message received was an error. Therefore parties to a commercial transaction have to take precautions to ensure that any messages to be sent contains accurate information and are indeed intended for the recipient.

Where?

How does one determine the location of dispatch and receipt of electronic messages? The Act deems an electronic message to be sent from the originator’s place of business and received at the addressee’s place of business. If there is more than one place of business, it will be considered sent from the place of business that has the closest relationship with the transaction or in the absence of that, from the principal place of business. In circumstances where the originator or addressee has no place of business, it will be deemed sent or received, as the case may be, at the originator’s or addressee’s ordinary place of residence.

When?

With regards to the issue of time of dispatch, an electronic message is deemed by the Act to be sent when it enters an information processing system outside the control of the originator. Therefore it would appear that the time of dispatch will be when a person clicks the ‘Send’ button when e-mailing or the ‘Buy/Purchase’ button on an online store.

An electronic message is deemed to be received when the message enters the designated information system (where there is a designated system), for instance, when a message enters the inbox folder of an e-mail account, or where there is no designated system, when the addressee comes to know about the message.

Where the parties agree or the originator requests that receipt of the electronic message is acknowledged, that message will be treated as though it has never been sent until the acknowledgment is received. If the method of acknowledgment has not been agreed by the parties, any acknowledgment (automated or otherwise) or any conduct of the addressee which is enough to communicate receipt, will suffice as acknowledgment.

Furthermore, the Act is a step forward in the regulation of contracts effected by electronic means. It lays down the legal principles that apply to the formation of such contracts as according to Section 7 of this Act, it provides that:

7. (1) In the formation of a contract, the communication of
proposals, acceptance of proposals, and revocation of proposals and acceptances or any related communication may be expressed by an electronic message.

The Act also lays down the requirements that have to be satisfied to establish the terms of these contracts, thereby enabling parties to put in place infrastructure that is capable of fulfilling these requirements.

In addition, the enforcement of the Consumer Protection (Amendment) Act 2007 on 15 August 2007 enables consumers who acquire goods or services through electronic means to file claims in the Tribunal for Consumer Claims under the Consumer Protection Act 1999. This will reduce the costs and expedite the disposal of litigation that arises from such transactions.

In conclusion, the act of Government in enacting this Electronic Commerce Act 2006 gives advantages to the consumers especially to those who actively conducting business transactions through the Internet.

*Electronic Commerce Act 2006 is on the sidebar.