One of the main implications of the COVID-19 pandemic is the significant alteration of the way business is conducted. The possibility of transmission of the virus during face-to-face meetings and through contact with infected surfaces (such as stationery, tables, chairs, doorknobs etc.) has made physical closing of deals and execution of contracts less attractive. Given the new reality, parties have resorted to concluding deals and contracts via e-platforms (emails, teleconferencing platforms etc.) and signing contracts electronically whether through pre-scanned signatures or through e-signature apps such as DocuSign, PandaDoc, SignEasy etc.
The increasing use of e-contracts and e-signatures has raised the important question of whether e-contracts and contracts executed electronically are legally binding and enforceable. This Article seeks to answer that question under Nigerian law.
ARE E-CONTRACTS VALID AND ENFORCEABLE?
Yes. Nigerian courts will enforce electronic contracts once the basic elements of contracts under Nigerian law (i.e. offer, acceptance, consideration and intention to create a legal relationship) are present and the electronic contract is not vitiated by incapacity, mistake, misrepresentation or illegality.
Unless specifically required by law, there is no general requirement that a contract be in writing under Nigerian law. A contract may be formed orally or inferred from the conduct of the parties. Accordingly, except for contracts required to be in writing by law, contracts formed via telephones or teleconferencing platforms (e.g. Microsoft Teams, Zoom etc.) are valid and enforceable under Nigerian law. Parties would, however, be required to prove the existence of such oral contracts in court. As a practical matter therefore, where parties enter into an oral contract by voice calls via the telephone or some other teleconferencing platforms, it is advisable that such calls be recorded, and that the evidence of the consideration and other correspondence exchanged between the parties regarding the contract be preserved. Examples of contracts that are required to be in writing under Nigerian law include contracts for sale of or charge on land and a contract by any person to answer for the debt, default or liability of a third person.
In Lagos State, unless the law or the parties’ express agreement requires that a contract be in writing, a contract can be made in any form including electronic and other form of recording.[1] Furthermore, section 2 of the Law Reform (Contracts) Law of Lagos State, 2015 (the “Contracts Reform Law”) provides that, where a contract is required to be in writing by law, “writing will include electronic messages such as telegram, telex, facsimile, electronic data exchange, electronic mail and any other form of electronic messaging form which is capable of expressing its contents in a tangible form.” Accordingly, even where a contract is specifically required by law to be in writing, the parties may conclude the contract electronically, provided that the electronic format chosen by the parties is such that is capable of expressing its contents “in a tangible form” i.e. capable of being produced in a physical format. Please note that Contracts Reform Law is only applicable in Lagos State, and for it to apply to any contract,
- parties must have designated Nigerian law as the Governing Law of their contract and the making or performance of the contract must in Lagos State; or
- where the agreement is silent on Governing Law, the making or the performance of the contract must be in Lagos State; or
- where the contract relates to real estate, the real estate must be located in Lagos State; and
- the contract is not one that is required by a superseding federal law to be in writing.
ARE ELECTRONIC SIGNATURES VALID AND ENFORCEABLE?
Yes, electronic signatures are valid and enforceable under Nigerian law with a few qualifications.
While Nigerian law does not require that all contracts be in writing, where a contract is in writing, Nigerian law requires that the contract be signed by the parties. An unsigned contract has no probative value and cannot be enforced in court.[2] It is therefore necessary that once the parties reduce the terms of their contract into a written document and are unable to achieve physical execution of the contract, parties execute the contract using electronic signatures. A signature is a person’s name or mark written by the person or at the person’s direction i.e. any name, mark or writing used with the intention of authenticating a document.[3] This includes an electronic signature. Under Nigerian law, where a rule of evidence requires a signature, or provides for certain consequences if a document is not signed, an electronic signature satisfies the rule of law or avoids those consequences.[4]
Furthermore, electronic signature in respect of purchases of goods and any other transaction is binding, and the burden of proof that the electronic signature does not belong to the purported originator of such signature is on the contender.[5] We should, however, emphasise that electronic signatures are not valid and enforceable for the following transactions/ matters:;
- creation and execution of wills, codicils and or other testamentary documents;
- death certificate;
- birth certificate;
- matters of family law such as marriage, divorce, adoption and other related issues;
- issuance of court orders, notices, official court documents such as affidavits, pleadings, motions and other related judicial documents and instruments;
- any cancellation or termination of utility services;
- any instrument required to accompany any transportation or handling of dangerous materials either solid or liquid in nature;
- any document ordering withdrawal of drugs, chemicals and any other material either on the grounds that such items are fake, dangerous to the people or the environment or expired by any authority empowered to issue orders for withdrawal of such items.
WHAT HAPPENS IF THE OTHER PARTY REFUSES OR FAILS TO SIGN THE CONTRACT?
It is not advisable that parties begin to perform the obligations under a contract until the parties to the contract have duly executed the contract. It is, however, possible in practice that, due to some exigency, a party may have begun to perform a contract before the terms of the contract are reduced into writing. The question then is, what happens if the performing party signs the contract, and the other party fails or refuses to sign?
There is a general presumption that a written contract does not become binding on a party unless such party has held himself out to be bound by the contract by signing the written contract. This presumption, is however, a rebuttable one. Where a party refuses to execute a written contract, but conducts himself in a clear and unequivocal way that he had agreed to the terms of the contract, the court is entitled to infer an implied contract from the conduct of both parties.[6] Consequently, while the unsigned written agreement itself may not be enforceable, the court will enforce the contract implied from the conduct of the parties. Moreover, under the Nigerian law of restitution, a person is not permitted to profit at another’s expense and to the unfair detriment of another, without making restitution for the rational value of any money, other property, services or benefits that have been unfairly received and retained by him.[7] A party who has, therefore, performed on the promise of another (e.g. by paying money) may be entitled to recover from the other party damages equivalent to the value of the performance, even if the other party refuses to execute the written document that ought to set out the relationship between the parties.
HOW DO I PROVE E-CONTRACTS AND E-SIGNATURES IN COURT?
E-contracts and e-signatures are generally admissible in evidence. The burden of proof that the electronic signature does not belong to the purported originator of such signature is on the contender.[8] An electronic signature can be proved in any manner, including by showing that a procedure existed by which a person was required to execute a symbol or a security procedure before proceeding further with a transaction for the purpose of verifying that an electronic record is that of the person.[9] Section 84 of the Evidence Act, however, provides for certain conditions that must be satisfied before computer-generated evidence (a term which includes e-electronic contracts) can be admitted in evidence.
CONCLUSION
While countries have begun to ease COVID-19 lockdowns, there are still some restrictions in place for meetings and physical contacts in so many countries, and in companies around the world. Concluding and signing contracts electronically may therefore be the norm for the foreseeable future. E-contracts and e-signatures are generally valid, binding and enforceable under Nigerian law. Nigerian law further provides protection for persons using e-signatures by specifically criminalising forgery of electronic signatures.[10] While e-contracts and signatures are generally valid and enforceable, it is advisable to seek and obtain legal counsel before concluding/ executing any e-contract, as there may be industry-specific legislation/ regulations that impact on the validity of a particular contract.
[1] section 1 of the Law Reform (Contracts) Law of Lagos State, 2015
[2] Omega Bank Plc v. O.B.C (2005) 8 NWLR (Pt. 928) 547
[3] Dr. Bolaji Akinsanya & Anor. v. Federal Mortgage Finance Limited (2010) LPELR-3687(CA), The Vessel NV Naval Gents & Ors v. Associated Commodity Int’l Limited (2015) LPELR-25973(CA), Mohammed v. Martins Electronics Company Limited (2009) LPELR-3708(CA)
[4] section 93(2) of the Evidence Act, 2011
[5] Section 17(1) and (2) of the Cybercrimes (Prohibition, Prevention, Etc.) Act, 2015, see also section 3 of the Law Reform (Contracts) Law of Lagos State, 2015
[6] Union Bank of Nigeria Plc v. Awmar Properties Limited (2018) 10 NWLR (Pt. 1626) 64; Compagnie Generale De Geophysique Nigeria Limited v. Okparavero Memoral Hospital Limited (2011) LPELR-3995(CA)
[7] (2014) 3 NWLR (Pt. 1395) 439
[8] Section 17( (2) of the Cybercrimes (Prohibition, Prevention, Etc.) Act, 2015
[9] Section 93(3) of the Evidence Act, 2011
[10] section 17(3) of the Cybercrimes (Prohibition, Prevention, Etc.) Act, 2015