Making Your Mark: E-Signatures in Hong Kong

19/06/2019

Make Your Mark Here

From centuries, the signature has been humankind’s way of showing one’s distinct identity on objects and documents. Throughout time and space, signatures have taken an infinite number of forms and mutations. It is not a wild leap to assume that this signature craze all started when some Palaeolithic humans some 15,000 years ago decided that they wanted recognition for their cave paintings and stencilled their handprint next to it.

The ancient Egyptians used hieroglyphics—a combination of pictographs to denote names. Romans were known to use signatures during the late empire, but the first incarnation of the signature as the western world knows it today came in 1069. “El Cid”, a nobleman from Medieval Spain, first signed his name on a document for a donation to a church. While on the other side of the world, the use of a seal was much more prominent— printing stamps and impressions of names on documents and objects, a practice which continues to this day.

The signatures of today, and in particular, electronic signatures are a radical departure from the past. Hand-singing something and using a seal a hundred years ago was much more of a physical manifestation of one’s word and bond. The pomp and circumstance of making your mark felt damn important each time, whether it was dipping a fountain pen in ink, melting red wax on a letter and sealing it with a signet ring, or using a heavy jade stamp to authoritatively impress your name on a document with red ink. Signatures felt like they mattered.

Today, any scribble on a tablet will suffice. However, do not be fooled by the casual nature of electronic signatures—they are just as binding as written or “wet” signatures.

What Is Required For An E-Signature To Be Valid In Hong Kong

The use of electronic signatures is governed by the Electronic Transaction Ordinance (ETO) Cap. 553, and within this piece of legislation is the definition of “electronic signature”.

It is defined under Section 2 as “any letters, characters, numbers or other symbols in digital form attached to or logically associated with an electronic record, and executed or adopted for the purpose of authenticating or approving the electronic record”.

What this means is any electronic depiction of what is usually a written signature will be enough on an electronic document. It could literally be a happy face, if you so wish to use that as your signature. The definition is very loosely defined for the ease of people to do business. Some people may be illiterate, and for them, any mark they make electronically will have the same legal effect as a written one. 

The Rules

Here are the rules in the ETO for electronic signatures: Section 6(1) of the ETO sets out three requirements for an electronic signature to be valid when the transaction in question does not involve anyone related to a government entity:

  1. the person whose signature is required by law to be given uses a method to attach the electronic signature or associate the electronic signature with an electronic record to identify himself and indicate his authentication/approval of the information in the electronic record—e-signature must be part of the e-document;
  2. the method indicated in (1) is reliable and appropriate so that the information in the electronic record is communicated; and
  3. the person to whom the signature is given consents to the use of the method by the person whose signature is required by law to be given—get consent

If all three simple criteria are fulfilled, the electronic signature itself will be legally binding.

However, there are other considerations that must be accounted for when using electronic signatures. 

Scope and Applicability of Electronic Signatures

Electronic signatures will work for most legal documents. Here are the circumstances when an electronic signature will not be legally binding, and a “wet” signature is required: 

Exceptions under Schedule 1 of the ETO: 

  • Testamentary documents 
  • Trusts (other than resulting, implied or constructive trusts)
  • Assigning power of attorney
  • Documents concerning land and property transactions
  • Negotiable instruments
  • Court orders/judgments
  • Warrants issued by a court or a magistrate
  • Oaths and affidavits
  • Statutory declarations

Most of what has been listed above will not apply in the day-to-day affairs of a business, but it is worth mentioning.

With regards to overall scope of electronic signatures, for transactions not involving government entities, a signature requirement under law can be met by any form of electronic signature so long as it is reliable, appropriate and agreed by the recipient of the signature.

However, for any legal transactions involving Government entities, a signature requirement under law must be satisfied by digital signature supported by a recognised digital certificate issued by a certification authority that is recognised under the ETO.

Examples of a certification authority include the Postmaster General of Hong Kong and Digi-Sign Certification Services Ltd. 

Paperless Contracts

The ETO also dedicated an entire section in its provisions about the use of electronic signatures in contracts. It is after all the bread and butter of the electronic signatures game—it would be amiss if I did not specifically discuss the use of electronic and online contracts when I am currently writing for Zegal, who provides that very service. 

Section 17 of the ETO has some guidelines about the use of electronic signatures within contract law. So here are a few contract law refreshers:

  • Offer and the acceptance may be in whole or in part conducted through electronic records
  • It also goes on to say that the validity of a contract will not be void if the only reason given is that an electronic signature was used
  • Section 17 does not affect common law rules of contract

It is hugely important to not forget the last point. Common law rules of contract still apply. If the party that made the offer stipulated very clearly that only one method of acceptance was permitted, that method of acceptance must be exact for the acceptance to be valid. If the prescription for the method of acceptance is somewhat vague, then acceptance can be communicated by other methods that are equally or more advantageous (convenience and speed). 

Electronic Signatures in the People’s Republic of China

Here is a quick bonus section on electronic contracts and signatures in China. The Electronic Signature Law of the People’s Republic of China (ESL) stipulates that a written signature is not absolutely required for the formation of a valid contract. Contracts can be formed verbally, electronically or in a physical paper document. Like Hong Kong, an electronic signature in China has the same legal force as a “wet” signature.

The requirements for a valid electronic signature in China under Article 13 of the ESL are as such: 

  1. When the creation data of the electronic signature are used for electronic signature, it exclusively belongs to an electronic signatory;
  2. When the signature is entered, its creation data are controlled only by the electronic signatory;
  3. After the signature is entered, any alteration made to the electronic signature can be detected; and
  4. After the signature is entered, any alteration made to the contents and form of a data message can be detected.

Here are a number of circumstances where the use of an electronic signature is not permitted: 

  • Commercial and residential leases
  • Human resources documents
  • Certain family law documents, including those pertaining to marriage, adoption, and succession
  • Pledges and mortgages (must be registered with an agency that only accepts handwritten signatures)

Business is increasingly being conducted electronically either in part or as a whole. Globally, there are fewer and fewer instances where you will find a transaction with no digital element at all. For most of us living in countries with developed internet and communications infrastructure, electronic signatures may be a part of everyday life. Having a succinct understanding of the implications of signing your name electronically is necessary. 

 

Sikhei Leung is a law student and freelance writer. He holds a LL.M. in Human Rights from the School of Oriental and African Studies and a LL.B. from BPP University London. He also has a Psychology degree from Durham University.

 

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

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