The Kenya Information and Communication Act (‘KICA’) recognises digitally signed contracts and electronic contracts formed in the course of transactions between parties using electronic means such as email. Section 83J of the Act provides that save for statutorily exempt contracts, a contract formed electronically shall be valid and enforceable.
The Act also recognises contracts executed/concluded with an electronic signature using a digital signature such as DocuSign and similar certificated and licensed signature software. However, negotiable instruments such as promissory notes and cheques are still required to be in hard copy as they are specifically exempt from the law on electronic transactions under Section 83B of KICA.
Recently, in an effort to provide an effective legal framework for implementation of Section 83 of the KICA on electronic contracts and electronic transactions; Kenya enacted the Business Laws Amendment Act in March 2020, to buttress the KICA statute. This 2020 Amendment inter alia solidified and aligned the statutory provisions under KICA as pertains electronic contracts and electronic signatures with other existing statutes relating to land; registration of documents and stamp duty as follows:
- Amending the Land Registration Act to provide that instruments for the disposition of interests in land may be in electronic form.
- Amending the Law of Contract Act to provide that where a contract related to the disposition of an interest in land requires a signature by any signatory, this shall be fulfilled by an electronic signature. This effectively allows electronic real estate contracts.
- Amending the form in which signatories may register documents/contracts; signatories may now file their documents for registration in electronic form.
- Amending the Stamp Duty Act to allow for electronic stamping of documents that have been assessed with stamp duty tax. Mechanisms to implement this Amendment are still ongoing.
When can Electronic Signatures (E-Signatures) be used?
Parties in Kenya may now use an e-signature where any contract is required to be signed. However, such signature shall only be valid if an advanced electronic signature is used. An advanced electronic signature means a digital signature using a signature creation software whose authenticity can be authenticated as follows:
- The signature data is linked to each signatory and no other person (this is best indicated through the electronic signature certificate created after each signatory has signed).
- The signature data was under the control of the signatory and no other person.
Foreign and Local Parties: Cross Border Electronic Contracts
Where the contract relates to a cross border transaction, it is absolutely essential for the enforceability of your contract to check whether the jurisdiction where the counterparty is domiciled AND the jurisdiction where you will seek recognition and enforcement of the contract also recognize electronic contracts and electronic signatures.
Evidentiary Issues of Electronic Contracts
Electronic contracts are just as liable as traditional contracts to be disputed both in terms of validity and enforceability. The Evidence Act of Kenya (Cap 80) has standards on propounding electronic or digital proof and failure to maintain proper electronic records of the electronic contract to specified standards, may diminish the persuasiveness of the electronic contract, render it inadmissible or even negate its validity.
It is important when using electronic signatures, to only use an advanced electronic signature that can be authenticated if ever presented to a certification provider licensed in Kenya. This entails use of legitimate and proprietary digital signature software which the party is authorized to use under a valid licensing agreement.
In the event of a dispute, the aggrieved signatory ought to be able to provide an electronic record of proof of any electronic contract. Therefore, good e-document storage and high cyber security is important to avoid distortion of information relating to your electronic contract.
