THE LEGALITY OF ELECTRONIC SIGNATURE IN TRANSACTIONS IN NIGERIA

Before the age of computers, everything including contractual agreements were done on paper. So it is easy to see why we used handwritten signatures then as we scribble things to authenticate a document. But we have computers now and with the rapid growth of the internet and with more businesses are going digital/online, most documents are now digital.

This was more glaring during the physically distant COVID-19 situation, as almost all businesses were compelled to digitalized their operations, including documentation and contracts. Hence, there was no more printing, physically signing, scanning and/or hand delivery of documents.

With e-signature, document approval timeline is drastically reduced from weeks to hours or even minutes and also makes it so much easy to track, manage and store. E-signatures do everything that a handwritten signature can do, even better. They are more convenient. They allow parties examine and sign documents remotely from a computer or smartphones no matter where in the world. Once parties sign, the result is instant. No waiting for emails. Electronic signature services are very affordable for small businesses. There are also free Apps for it.

What is Electronic Signature?

In simple terms, electronic signature means a signature in electronic form. It can be a symbol or a security procedure evidencing a signatory identity such as a scanned image of handwritten signature, a biometric hand signature, a typed name at the end of an email/CV, a click to indicate consent online, as long as it creates an intention to enter legal relations and be bound by it.

It is a process that uses the computer to authenticate the signatory and certify the integrity of a document. E-signature can also include a digital signature, but strictly speaking, they are not the same. Just like handwritten signature, e-signature enables signatories to approve or agree on terms of an agreement.

The subtle difference between Electronic and Digital Signature

The terms “electronic signature” and “digital signature” are sometimes used interchangeably; however, they do not mean the same thing.

Electronic signatures are signatures which are affixed or incorporated in electronic contracts or documents through electronic or cryptographic means. Examples of e-signatures are a scanned image of handwritten signature, a biometric hand signature, a password, a typed name at the end of an email/CV, a click of “I accept” burton indicate consent online.

On the other hand, a digital signature is an advanced e-signature that uses cryptography to scramble signed information into an encrypted format and decodes it again for the recipient. It requires specialized third parties, known as certification authorities (CAs) to provide certification services for verifying the signer’s identity. Digital Signatures uses complex algorithms and certificate authorities to authenticate the signer along with the integrity of the document.

Is Electronic Signature Legal and Enforceable in Nigeria?

Yes, under Nigerian law, an electronic signature is legal and enforceable in a contract if all the elements that constitutes a valid contract (i.e. offer, acceptance, consideration, intention to create legal relationship and capacity to contract) are present. To constitute a binding and legally enforceable contract between parties, these elements must be present.

• The Nigerian Evidence Act 2011 recognizes the use of electronic signatures. Section 93(2) and (3)thereof recognizes e-signatures and provides that where a rule of evidence requires a signature or provides for certain consequences if a document is not signed, then an electronic signature is permissible. However, the party relying of the e-signature must authenticate or proof that a procedure exists to verify that the electronic record is that of the person.

• Section 17 of Cybercrimes (Prohibition and Prevention) Act, 2015 also recognizes the use of electronic signatures in Nigeria, they are court admissible & safe for general business use such as purchase of goods & any other business transaction, including, employment contracts, NDA, Privacy Notices, commercial agreements, consumer agreements, shall be binding. However, the Act provides exceptions to certain transactions that e-signatures are not allowed, such as wills, codicils and other testamentary documents; death and birth certificates, matters of family law such as divorce, adoption; Issuance of Court orders; legal requirement in affixing a signature, etc.

• Section 101 of Companies and Allied Matters Act (CAMA) 2020 has now introduced e-signature in corporate transactions and filings. It provides that documents requiring authentication by a company can now be signed electronically by a director, secretary or other authorized officer of the company and need not be signed as a deed. Also, partly due to the physically distant COVID-19 situation, the Corporate Affairs Commission (CAC) now accepts e-signature in the registration and incorporation of business entities, as handwritten signatures are now uploaded through the Company Registration Portal (CRP) during registration.

This is in contrast with the previous Companies and Allied Matters Act (CAMA) 1990 that did not provide for the use of e-signature, hence, during registration, the necessary registration forms were printed for proprietors/shareholders to affix their handwritten signature, and then the form is scanned and uploaded to the CRP. This resulted in waste of time and resources and therefore longer period before a company is registered.

With this new requirement for e-signature, when registering a new company on behalf of clients, a lawyer should ensure to advise his clients to incorporate the use of electronic signature into the company’s constitutional documents (particularly its Articles of Association). While, due to the newness of CAMA’s provision on e-signature, it is not uncommon for most existing company’s constitutional documents to remain silent on the issue of electronic signature, it is advisable for such companies to review their articles before arranging for electronic execution. This is to ensure that the constitutional documents do not either expressly require the execution of documents in person or prevent the use of electronic signatures. In the interest of certainty, some companies may consider expressly authorizing the execution of documents electronically through a board resolution.

Benefits of Electronic Signature

• It is instant, convenient and foolproof – the moment you apply your e-signature on a document is the moment you can move to the next step.
• E-signatures also make signing documents easier. You could sign or request signatures from virtually anywhere in the world with your devise. No printing, signing and scanning.
• The environment. Imagine tree felling for papers, the printing equipment contributes to carbon emission, etc.
• E-signature is binding in most or all jurisdictions in the world.
• E-signature is secure even more than wet ink-based signature. Wet signatures can be forged, but e-signature is secured by sophisticated cryptographic algorithms to prevent tampering as it maintains an audit trail to settle disputes.
• E-signature is cost effective and mobile friendly.

DISCLAIMER:

The content of this article is intended to provide a general guide to the subject matter.

You may reach out to us about your specific circumstances.

Author

Obinna O. Agwu