Digital contracts and e-signatures: Things to consider before clicking “I agree”

Siranya Rhuvattana

During the past few months amid COVID-19, we have witnessed drastic business models changing, more adoption of remote working programs as well as increased use of technology, both for customer services improvement and for managing organizational changes. These conditions have given rise to growth in online transactions and greater demand for electronic execution of legal documents.

There are a few things to consider, such as those listed below, before an authorised director or other authorised person in an organisation takes action via electronic means.

Do Thai laws recognise e-contracts and e-signatures?

Yes. The Electronic Transactions Act B.E. 2544 (2001) (“ETA”) recognises digital contracts and e-signatures. Parties can execute a contract, give consent, make an offer, accept an offer, and send a notice in an electronic form. The legal effect of these electronic transactions cannot be denied, if the requirements under the law are met.

What is an e-signature?

E-signatures can be a letter, character, number, sound or any other symbol created in electronic form and affixed to electronic data. The purpose of e-signatures is to establish the link between a person and the electronic data, and to show that the signatory approves the electronic information which has the e-signature. Samples of general e-signatures include use of a one-time password (OTP), biometric data such as finger prints, initials at the end of an email, and a scanned wet signature attached to a document.

Taking an action via an electronic method could also be deemed as entering an e-signature, whether it be by sending an email confirmation of purchase orders, clicking the agree button to terms of services, or double clicking the mobile phone button for an online purchase. Supreme Court decision No. 8089/2556 ruled that the defendant’s use of the card and entering the 4-digit personal password to withdraw cash was regarded as entering the defendant’s e-signature. Therefore, such acts could be used as evidence for loan transactions.

Creating a valid e-signature under the law

A valid e-signature must comply with the methods required under the ETA. For general e-signatures, the method used must be capable of identifying the signatory and the

signatory’s intention as to the electronic content (e.g., the signatory accepts and agrees to it). The method should be reliably appropriate for the purpose for which the electronic data was generated or sent.

That said, it is possible to prove that the e-signature is valid with other circumstantial evidence. In the Supreme Court’s decision No. 6757/2560, the plaintiff sent a message to the defendant via Facebook stating that the defendant did not have to pay the loan. The Supreme Court found that sending messages via Facebook would display the sender’s name and the plaintiff also admitted that he had sent the messages to the defendant. For these reasons, conversation messages in Facebook could be heard as evidence of debt release according to the Thai Civil and Commercial Code, and the defendant would not be liable to paying the debt to the plaintiff.

Depending on the types of transactions and the parties’ choice, the parties may opt for a trustworthy e-signature, using technology that meets the required trustworthiness criteria under the ETA. If the requirements are met, the parties would not need to prove the validity of the e-signature. To meet the trustworthiness criteria, the data used to create the e-signature have to solely be linked to the signatory and under the signatory’s sole control, and any changes to the e-signature or the content endorsed by the e-signature has to be detectable.

Use of Public Key Infrastructure digital signatures are one example of a trustworthy e-signature. In addition, parties may also use Public Key Infrastructure with a certificate issued by a certificate service provider to verify the connection between the signatory and the data used to create the e-signature.

E-signatures can generally be used to effectuate contracts and various types of other documents, including commercial agreements (such as sales and purchase agreements, purchase orders, invoices, distribution agreements and services agreements), consumer agreements, including software licences (EULA), warranties, aftersales service agreements), and employmentrelated documents (such as employment “The Electronic Transactions Act B.E. 2544 (2001) (“ETA”) recognises digital contracts and e-signatures. Parties can execute a contract, give consent, make an offer, accept an offer, and send a notice in an electronic form.” agreements, non-disclosure agreements and privacy notices to employees).

What types of documents cannot be executed electronically?

Transactions related to family and succession cannot be executed electronically under the ETA. Wet signatures and registrations are required for some types of transactions – normally transactions for real estate such as a contract of a sale of immovable property, and legal documents which require legal formality, such as mor tgages and lease agreements of immovable property for more than three years.

It is prudent to always review rules and regulations if an e-signature is acceptable for filing the documents with government authorities, although certain government departments – such as the Department of Business Development, the Ministry of Commerce, the Revenue Department, and the Court of Justice – have accommodated certain e-services and e-filings.

Can a director sign an e-contract on behalf of a company?

Yes. However, care should be taken when a company’s seal is required. To validly affix the company’s seal, the same requirements and methods as those used for creating a valid e-signature must be met. In addition, similar to wet signatures, where the authorised directors or authorised persons sign a document on behalf of the company, evidence should be present and retained to show the signatory’s identity and scope of authorization (e.g., power of attorney).

The Electronic Transactions Development Agency also recommended in the Recommendation on ICT Standard for Electronic Transactions re: Electronic Signature Guidelines that if there is more than one signator y in the same document, all e-signatures should be made in a similar type and form so that the evidence of e-signatures can be retained in the same direction. Nevertheless, the ETA and the Guidelines are both silent as to whether, in the case where more than one e-signature is required, the e-signatures could be signed in different and separate counterparts or that they must be sequentially applied to a single document.

Contact details: Siranya Rhuvattana Partner, IPTech Baker McKenzie, Tel: +66 2 666 2824, ext. 4950, siranya.rhuvattana@bakermckenzie.com, https://www.bakermckenzie.com/en