TABLE OF CONTENTS

　　A. Introduction 簡介

　　B. Contract law in Malaysia 馬來西亞合同法

　　C. Postal rule in Contracts Act 1950 (Malaysia) 1950年合同法案中的通訊規(guī)則

　　D. What is an electronic contract 關(guān)于電子合同

　　E. When is an electronic contract created 電子合同簽約的時機

　　F. Legal recognition of data message to form a valid contract 構(gòu)成有效合同的合法數(shù)據(jù)信息

　　G. The requirement of a signature 合同簽署的條件

　　H. Writing requirement 書面合同的條件

　　I. Digital Signature Act 1997 (Malaysia) 1997年電子簽名法案

　　J. Conclusion 結(jié)論

　　Electronic commerce is expanding at an ever-increasing rate on the Internet. To facilitate e-commerce uniform electronic contract laws have been proposed for nation states by UNCITRAL, known as the UNCITRAL Model Law on lectronic Commerce. Following this Model Law many countries have enacted electronic contract laws. However, it seems that Malaysia is moving very slowly to update its existing contract laws. The Contracts Act 1950 (Malaysia) is an old statute which provides the postal rule to govern the formation of a contact. It is silent about the emerging new issues on e-contracts. However, the Digital Signature Act 1997 (Malaysia) promotes e-commerce and e-contracts in Malaysia by legalising the use of digital signature technology. This article discusses and analyses e-contract laws in Malaysia based on Contracts Act 1950 and Digital Signature Act 1997. It concludes with recommendations as to how Malaysian law could be amended to conform more closely to international developments in this area.

　　A. Introduction 簡介

　　The fundamental elements of a valid contract are offer, acceptance and consideration. Before the emergence of online contracts, the traditional contract was made orally or in writing on paper. In traditional contracts, offer and acceptance are usually communicated by letters sent by post. Accordingly, the postal rule1 governs the formation of a traditional contract. In this rule the communication of an offer is complete when it comes to the knowledge of the offeree and the acceptance is complete against the offer or when the letter is posted. That is, acceptance is effective and complete at the moment the letter is posted, whether or not the proposer received the acceptance letter. This is designed to prevent the proposer from changing his/her mind after the acceptance has been posted but before it has been received.

　　As in other jurisdictions, Malaysian customers are buying large quantities of goods online. Reliable statistics are not available in this country but research is being undertaken to produce such figures. This type of transaction on the Internet is known as electronic contracting. In such contracts a data message is used to form a contract which is substantially instantaneous in nature.

　　The number of electronic transactions in Malaysia is increasing as some of the volume is initiated by Multimedia Super Corridor (MSC) companies operating their business online. As of December 7, 2001, a total of616 companies had been granted MSC status of which 50 are international world-class companies. At present approximately 700 companies have been granted

　　MSC status to operate in the Corridor. Currently 3 million Malaysians have access to the internet which is more than 12% of its total 24 million population.

　　B. Contract law in Malaysia 馬來西亞合同法

　　The provisions of the Contracts Act 1950 (Malaysia) were taken from the Contract Act 1872 (India) which was in line with common law in the UK. The Contracts Act was amended in 1974 and its provisions are more or less similar to the applicable contract laws in the UK. The sources of contract law in Malaysia are the Contracts Act 1950, the Sale of Goods Act 1957, English common law, rules of equity, English commercial law in general and decisions of Malaysian courts.

　　The decisions of English courts relating to contractual issues are persuasive in Malaysia if not contrary to the provisions of the Contracts Act 1950. English common law, rules of equity and commercial law in general are applicable in Malaysia under sections 3 and 5 of the Civil Law Act 1956 (Malaysia) so far as they are suitable for the local circumstances ofMalaysia.

　　A contract is defined under the Contracts Act as an agreement enforceable by law. When two or

　　more parties agree to do something or abstain from doing something, an agreement is made between them. This agreement is a contract if recognised by law. An agreement is recognised by law if the objective and consideration of the agreement is lawful. For example, A company has agreed to buy 100 Dell computers from the Dell computer company and Dell company has agreed to sell and supply the computers to A company for the agreed price. Here a sale agreement has been made between A company and Dell company. This agreement is lawful and therefore it is a valid contract.

　　The number of electronic transactions in Malaysia is increasing

　　The essential elements of a contract under Malaysian contract law are: offer, acceptance, consideration, intention to create legal relations, objective and consideration of the agreement should be legal and enforceable by law; certainty, capacity, free consent and formality (if required by law). Unlike the position in the UK, in Malaysia, past consideration is a good consideration and recognised under section 2(d)9 of the Contracts Act 1950.10

　　In the UK law the terms used are offer or and offeree. In the Contracts Act 1950 (Malaysia) the

　　equivalent terms are proposer and acceptor, although section 2(c) of the Act also uses the terms

　　promisor and promisee. This is in contradistinction to the terms used in the UNCITRAL Model Law: originator and addressee.

　　The Sale of Goods Act 1957 (Malaysia) provides certain implied conditions and warranties for a sale contract to protect the interest of buyers. These implied conditions and warranties are as follows:

　　It is an implied condition that the seller must have a right to sell the goods;

　　It is an implied warranty that the buyer shall have and enjoy quiet possession of the goods;

　　It is an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made;

　　Where there is a contract for sale of goods by description there is an implied condition that the goods shall correspond with the description;

　　The goods should be reasonably fit for the buyer’s purpose;

　　The goods should be of merchantable quality if bought by description from a seller who deals in goods of that description;

　　In case of a contract for sale by sample in quality there is an implied condition that the bulk shall correspond with the sample in quality and the buyer shall have reasonable opportunity to compare the bulk with the sample. It is necessary to consider the extent to which these terms are applicable to contracts executed online

　　C. Postal rule in Contracts Act 1950 (Malaysia) 1950年合同法案中的通訊規(guī)則

　　If we read carefully the provisions of the Contracts Act 1950 (Malaysia) related to the formation of

　　contracts, we will find that the Act provides that the postal rule of acceptance (also known as ‘mailbox rule’) shall apply to the formation of a contract. It does not, however, contain any provisions for the formation of a contract online. Section 2 of the Act defines proposal as follows:

　　When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal.

　　The section defines an acceptance as follows:

　　When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.

　　Section 4 of the Act provides that:

　　(1) The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

　　(2)The communication of an acceptance is complete –

　　(a) As against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; and (b) As against the acceptor, when it comes to the knowledge of the proposer. Illustrations (a) and (b) of section 4 of the Act provides:

　　(a) A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter. (b) B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete:

　　-As against A, when the letter is posted;

　　-As against B, when the letter is received by A.

　　The above provisions and illustrations under section 4 of the Contracts Act 1950 (Malaysia) clearly apply the postal rule of acceptance. They do not provide any provisions for electronic contracts. Although contracting on the Internet is a relatively new phenomenon, many countries have already

　　amended or enacted new laws to validate electronic contracts. However, the Malaysian government has not yet taken any initiative to incorporate electronic contractual issues in the Contracts Act 1950.

　　D. What is an electronic contract? 關(guān)于電子合同

　　A contact can be made orally or in writing. A written contract is made in writing on papers and e-Contract law – Malaysia signed by the parties. A contract can also be made on the Internet where no paper and pen is needed. This contract is known as an electronic contract. Such contracts are made by sending an electronic message. Offer and acceptance are communicated on the Internet. An electronic contract is usually made by e-mail, electronic data interchange (EDI), World Wide Web interface, or chat services.

　　where an advertisement may be regarded as a definite offer – see Carlill v Carbolic Smoke Ball Co (1893) where it was held that an offer to the world at large was accepted when the customer

　　purchased the product and used it as directed.

　　E. When is an electronic contract created? 電子合同簽約的時機

　　When we communicate the offer and acceptance through the post office it takes long time to send the offer to the offeree and the acceptance to the offer or. However, we can communicate offer and

　　acceptance through the Internet within few seconds. Hence, the communication on the internet is said to be substantially instantaneous. Hence, the Internet has become a viable way ofmaking business contracts. It is another matter as to whether the message is inviolate as is normally the case with correspondence by snail mail.

　　The Statute ofFrauds has no application in Malaysia, but in some jurisdictions where it does apply, e.g. the US courts have attempted to apply the statute to electronic contracts. Some courts have held that an electronic contract is a writing and that the parties can use electronic signatures. Guidance on the possible future course of contract law in Malaysia can be obtained from the US Uniform Computer Information Transactions Act 1999 (UCITA); the UNCITRAL Model Law on Electronic Commerce 1996, and the US Uniform Commercial Code 1995 (UCC).

　　In order to ensure that documents are received by the intended recipient, and have not been intercepted in the course of transmission, jurisdictions have enacted legislation such as, in Malaysia, the Digital Signature Act 1997 (see below).

　　As with traditional contracts, it is necessary to distinguish between an offer and an invitation to treat

　　-that is, where a person holds himself out as ready to receive offers, which he may then either accept or reject. This is the case with goods on display in a shop window or on a supermarket shelf. Similar principles apply to electronic trading via the Internet. Posting advertisements on a website amounts to an invitation to treat; by selecting the products and services required, the customer is making an offer to buy, which may be accepted or rejected by the seller. So if a company by mistake advertises on its website $2,000 computers for $200, it could refuse to sell the goods at

　　the advertised price. Although most advertisements will be treated as invitations to treat, there are some situations

　　An electronic contract is made by e-mail, electronic data interchange, World Wide Web interfaces or chat service. The communication in an electronic contract is substantially instantaneous in nature. When the acceptance is communicated using an instantaneous means of communication, the receipt rule is applicable, meaning that the acceptance must be communicated to the offer or. In the receipt rule, an acceptance of an offer is only effective, and a contract is only made, when the acceptance comes to the knowledge of the offer or.

　　It is a pertinent question as to when an electronic contract is created. The Contracts Act 1950 and the Digital Signature Act 1997 provide no answer. An electronic contract is created when the offer or receives the acceptance message. How does one determine the time when an acceptance message is received on the Internet? If an acceptance is communicated by this means, the acceptance is effective only when the acceptance message enters an information system of the offer or no matter when the offer or opens the information system and reads the message.

　　An electronic contract may be created even if no party to the contract is aware of the receipt of the acceptance. So, human interaction is not required to create an electronic contract. Electronic records exchanged in an electronic transaction are effective when received in a form and at a location capable of processing the record even if no individual is aware of their receipt.

　　F. Legal recognition of data message to form a valid contract 構(gòu)成有效合同的合法數(shù)據(jù)信息

　　An electronic contract is made by using a data message and legal recognition of data messages is very pertinent. The Contracts Act 1950 (Malaysia) is silent about the validity of a data message used to form an electronic contract. So, electronic commerce in Malaysia may suffer from the absence of laws related to the recognition of data message and validity of contract made by using such messages. However, the Digital Signature Act 1997

　　Malaysia may suffer from the absence of laws related to the recognition of data message and validity of contract e-Contract law – Malaysia (Malaysia) impliedly recognizes the validity of data messages used to form an electronic contract.

　　Section 62(2)(a) of the Act provides:

　　Notwithstanding any written law to the contrary a document signed with a digital signature in accordance with Digital Signature Act shall be as legally binding as a document signed with a handwritten signature, an affixed thumbprint or any other mark.

　　In the above quotation, the reference to a ‘document’ means a data message signed with a digital signature. This section also recognises the validity of an electronic contract if the data message communicated to form the electronic contract is digitally signed in accordance with the Digital Signature Act.

　　Although the Contracts Act 1950 (Malaysia) has no provision to validate the use of a data message

　　to form an electronic contract, on the basis of section 62(2) of the Digital Signature Act, we may argue that electronic contracts are valid in Malaysia.

　　Parties may agree to be bound contractually only on receipt of an acknowledgement that the acceptance has been received by the proposer. This is acceptable for online contracts, or, alternatively, they may prefer to abide by the postal rule.

　　Article 5 of the UNCITRAL Model Law on Electronic Commerce states:

　　Information shall not be denied legal effect, validity or enforceability solely on the grounds that it is in the form of a data message.

　　If state law requires writing, such law is complied with by a data message. Data message is defined in Article 2 as follows:

　　Information generated, sent, received or stored by electronic, optical or similar means including but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or copy

　　In a legal proceeding, the rules of evidence are not to deny the admissibility of a data message or that it is not in original form if it is the best evidence. The weight to be given to the data message is dependent on the manner in which the evidence was generated, stored, or communicated, the integrity of the message, the manner in which the originator of the message was identified, and other relevant factors.

　　An offer and the acceptance thereof may be expressed by data messages unless the agreement provides otherwise. Such agreement shall be enforceable as a contract.14 The originator of a message may request the acknowledgement of a data message. Unless the originator makes a particular form of the acknowledgement, such acknowledgement may be given by any means of

　　communication by the addressee or by conduct sufficient to indicate the receipt of the message. If

　　the receipt of acknowledgement is a condition of the data message, then no data message is deemed sent without such receipt of acknowledgement.15 The time and place of sending and receipt of the message is determined by ascertaining if the addressee has designated an information system. If the addressee does so designate, then receipt occurs when the data message enters the said information system; or, if the designated information system is not used, then receipt occurs when the data message is retrieved by the addressee. If no information system is designated by the addressee, then receipt takes place when the data enters the addressee’s information system.

　　G. The requirement of a signature 合同簽署的條件

　　The law may require certain contracts to be in writing and signed by the parties. The Wills Act 1959 (Malaysia) provides that all wills must be in writing and signed by the testator.17 Ifa will is not signed by the testator it will not be valid and enforceable by law. As stated above, the Contracts Act 1950 provides no guidance on how to meet the signature requirement in electronic contracts. However, the Digital Signature Act 1997 (Malaysia) solves this problem in the case ofInternet transactions and provides that the requirement will be satisfied in an electronic transaction if digital signature technology is used to communicate the data message. Section 62(1) of the Act provides:

　　Where a rule of law requires a signature or provides for certain consequences in the absence of a signature, that rule shall be satisfied by a digital signature where (a) the digital signature is verified by reference to the public key listed in a valid certificate issued by a licensed certification

　　authority; (b) that digital signature was affixed by the signer with the intention of signing the message; and (c) the recipient has no knowledge or notice that the signer (i) has breached a duty as

　　a subscriber; or (ii) does not rightfully hold the private key used to affix the digital signature.

　　Hence, a digital signature is considered legally valid and enforceable. The validity of the digital signature should not be denied on the ground that the document was digitally signed and was not signed with a handwritten signature. Section e-Contract law – Malaysia

　　62(2) (b) of the Digital Signature Act 1997 (Malaysia) provides to this effect as follows:

　　A digital signature created in accordance with the Digital Signature Act 1997 shall be deemed to be legally binding signature.

　　H. Writing requirement 書面合同的條件

　　The law may require certain contracts to be made in writing on paper, for example a hire-purchase contract must be in writing and signed by the parties, and if this requirement is not complied with the agreement will be void. Section 4A of the Hire-Purchase Act 1967 (Malaysia) provides:

　　(1) A hire-purchase agreement in respect of any goods specified in the First Schedule (for example, all consumer goods and motor vehicles) shall be in writing. (2) A hire-purchase agreement that does not comply with subsection (1) shall be void. (3) An owner who enters into a hire-purchase agreement that does not comply with subsection (1) shall, notwithstanding that the hire-purchase agreement is void, be guilty of an offence under this Act.

　　Section 4B of the Hire-purchase Agreement 1967 (Malaysia) requires the hire-purchase agreements to be signed by all parties to the agreement. This section reads as follows:

　　Every hire-purchase agreement shall be signed by or on behalf of all parties to the agreement. A hire-purchase agreement that does not comply with the signature requirement shall be void and an owner, dealer, agent or person acting on behalf of the owner shall be guilty of an offence under this Act.

　　Where an owner who enters into a hire-purchase agreement without writing down the terms of the agreement, the agreement will be void and the owner will also be guilty of an offence under the Hire-Purchase Act 1967. The Contracts Act 1950 is silent on how to meet this writing requirement when the contract is made by using a data message on the Internet. The Contracts Act therefore produces uncertainty regarding a writing requirement in respect of electronic contracts. However, this uncertainty over the writing requirement may be removed by Digital Signature Act 1997. Section 64(1) of the Act states that a digitally signed message is deemed to be a written document. The section reads as follows:

　　A message shall be as valid, enforceable and effective as if it had been written on paper if (a) it bears in its entirety a digital signature; and (b) (i) that digital signature is verified by the public key

　　listed in a certificate which was issued by a licensed certification authority and (ii) was valid at the time the digital signature was created.

　　Ifwe analyze the above excerpt from section 64, we find that this section recognizes a data message as a written document if the message is digitally signed and the authenticity of the message is verified by the public key listed in a valid certificate issued by a licensed certification authority.

　　I. Digital Signature Act 1997 (Malaysia) 1997年電子簽名法案

　　Digital signature legislation is becoming of increasing importance to modern transactions, particularly those conducted on the Internet. The Malaysian Digital Signature Act 1997 is no exception. Its objective is to enhance electronic commerce and electronic contract in Malaysia. It recognises data messages used to form an electronic contract. It also provides that if a data message is communicated through digital signature technology, such message will be considered as a written document. The Act also provides that if a data message is sent using digital signature technology, no handwritten signature is needed. The entire data message will be considered as a digital signature if it is capable of verification by using the public key listed in the certificate issued by a licensed certification authority.

　　The Act ensures authenticity and integrity of data messages communicated through the Internet to make online contracts, and thus ensures security of communication through the Internet. A digital signature may be likened to a house with open doors and windows through which anybody can peep or view what is happening inside the house. As a result, users suffer from insecurity of communication. Since other Internet users, legitimate or not, may view messages, alter them, or copy them.

　　This panic of uncertainty and insecurity is removed by applying encryption technology. The recipient can effectively determine the identity of the sender and the authenticity and integrity of the message sent, by decrypting the message, using the sender’s public key listed in a valid certificate of the sender issued by the licensed certification authority. The recipient also can effectively determine whether the message has been altered in the course of transmission. Section 2 of the Digital Signature Act defines a signature thus:

　　Digital signature means a transformation of a message using an asymmetric cryptosystem such The Act ensures authenticity and integrity of data messages communicated through the Internet e-Contract law – Malaysia that a person having the initial message and the signer’s public key can accurately determine (a) whether the transformation was created using the private key that corresponds to the signer’s public key and (b) whether the message has been altered since the transformation was made.

　　The Act also ensures the evidential value of digitally signed message. This will not be denied for the only reason that a data message was used to make a contract. Further, it will be deemed to be an original document for evidential purpose to be used in court. Section 65 of the Act provides that:

　　A copy of a digitally signed message shall be as valid, enforceable and effective as the original of the message.

　　The Evidence Act 1950 (Malaysia) (Amended in 1997) also recognises a computer document for

　　evidential purpose in the court. Section 90A of the Act which was amended in 1997 provides that:

　　In any criminal or civil proceeding a document produced by a computer, or a statement contained in such document, shall be admissible as evidence of any fact stated therein if the document was produced by the computer in the course of its ordinary use, whether or not the person tendering the same is the maker of such document or statement.

　　To provide digital signature certificates to the subscribers, the Digital Signature Act (Malaysia)

　　has established certification authorities who issue certificates to subscribers to send messages using digital signature technology. The certification authority provides a key pair to subscribers. The private key is a secret key and it is the duty of the subscriber to keep this key secret at all times. The public key is made public and listed in the certificate issued by the certification authorities. At present the Malaysian Government has licensed Digicert and Msctrustgate as certification authorities.

　　J. Conclusion 結(jié)論

　　For parties entering contracts in Malaysia or with Malaysians it is immediately apparent that perusal of the Digital Signature Act 1997 reveals that it omits more than it includes. In several areas crucial to commercial transactions it is even less comprehensive than the Utah Digital Signature Act 1995 of which it is an almost complete copy. It is incomplete to the extent that the Malaysian legislation omits a number of provisions, more particularly those that were designed to afford consumer protection to the citizens of Utah.

　　In the absence of any unambiguous statement to the contrary it must be assumed that the law has reference only to transactions in which the participants are Malaysians operating in Malaysia. This is significantly different from the Computer Crimes Act 1997, which provides that the territorial scope of the Act:

　　shall, in relation to any person, whatever his nationality or citizenship, have effect outside as well as within Malaysia, and where an offence under this Act is committed by any parson in any place outside Malaysia, he may be dealt with in respect of such offence as if it was committed at any place within Malaysia.

　　Left unanswered are such questions as:

　　What are the consequences of breaches of the Digital Signature Act where one of the parties to a contract (sender or recipient) is outside Malaysia? The Act is silent on this.

　　Individuals enter into contracts. Is it envisaged that an individual would/should have a private key? If so, how effective is such a provision likely to be, given the necessity for expensive hardware and software?

　　The Act appears to be designed to offer comfort to those international corporations considering investing in the Multimedia Super Corridor. This is, of course, quite proper, and provides an attractive incentive. One of the less fortunate concomitants, however, is that consumers are considerably disadvantaged by certain provisions of the Act as it presently stands.

　　The liability allocations of the Act impose potentially unlimited risk on users of digital signatures. It also limits the liability of certification authorities. By failing to take into account consumer protection, at a time when the government is promoting the development of a public key infrastructure, the Act runs counter to the notion of consumer interests, as espoused in the long-awaited consumer protection legislation.

　　Under the Act, contracting parties using digital signatures are held (s 43) to a standard of reasonable care in preventing disclosure of their private encryption key. Establishing precisely what is meant by reasonable care may involve expensive litigation in the courts. Until this is achieved, and a clear standard has emerged, we may be faced with a series of inconsistent decisions by courts largely ill-equipped to determine highly technical and rapidly evolving issues.