Question:
Our company is transitioning from paper contracts to electronic contracts. Do electronic contracts have the same legal validity as paper contracts? How should the company store electronic contracts to ensure their evidentiary value in the event of a dispute?
Answer
Under the 2023 Law on Electronic Transactions, a data message cannot be denied legal validity merely because it is presented in electronic form. A data message may be used and have the same value as an original where the information is maintained in its integrity from the time it is first generated and remains accessible and usable in its complete form when necessary.
A data message may also be used as evidence. Its evidentiary value is determined based on the reliability of the method of generating, sending, receiving, and storing the data message; the method of ensuring and maintaining its integrity; the method of identifying the person who generated, sent, or received the data message; and other relevant factors.
Accordingly, to ensure the evidentiary value of electronic contracts, enterprises should establish a storage mechanism capable of:
- Retaining the contract in its complete form;
- Ensuring that the contract content is not unlawfully altered;
- Identifying the time of creation, signing, sending, and receipt;
- Identifying the person who performed the signing;
- Retaining relevant information and data relating to the contracting process;
- Allowing the contract to be accessed and produced when necessary;
- Maintaining appropriate backup and data security mechanisms throughout the retention period.
Enterprises should also note that the use of electronic contracts does not mean that every transaction may be conducted entirely electronically. Where specialized laws require a specific form, notarization, certification, or other conditions, the enterprise must continue to comply with such requirements.
Conclusion
Electronic contracts may have legal validity and evidentiary value equivalent to paper contracts if they satisfy the legal requirements applicable to electronic transactions and the applicable requirements on the form of the relevant transaction. Enterprises should particularly focus on integrity, accessibility, identification of the signatory, and the ability to retrieve the entire contracting process when establishing an electronic contract storage system.
