e-commerce law electronic signatures and security

E-commerce Law

Electronic signatures and security

Identity

One of the most important issues on the Internet is identity.

Anyone can be anyone on the Internet.

When in a computer chatroom, how do you know who you are really chatting with?

Identity

Why is identity important?

Because … … …

Identity ensures enforceability.

Enforceability

For example

Bill emails Paul and offers him 4000 blank CD ROMs for £400.

Paul emails Bill and accepts.

Enforceability

Paul then discovers that he can buy the same number of CDs from Carla who imports them cheaply from China for £300.

When Bill delivers the CDs to Paul, Paul refuses to accept them and states that someone other than himself must have sent the email and made the contract.

Enforceability

What is the legal position?

The answer lies in enforceability and proving on the balance of probabilities that Paul made the contract with Bill.

If Bill went to court would he win?

Enforceability

This will always depend upon the evidence that is available.

The same situation is true for shopping on the Internet.

Enforceability

The problem here lies with identity.

If you could prove identity you could enforce contracts more easily.

How can you prove who the person is at the other end of the electronic communication?

Electronic Signatures

The law for electronic signatures is founded in European Directive 1999/93.

It was formalised into UK law by the Electronic Communications Act 2000.

It was once to be called the Electronic Commerce Act, but was renamed during its passage as a large part of it deals with telecommunications.

Electronic Signatures

During its transition through Parliament, the main purpose of the ECA was

“to help build confidence in electronic commerce and the technology

underlying it.”

Electronic Signatures

The Act provides a major legal benefit - the legal recognition of electronic signatures.

Section 7 of the Act gives electronic signatures the same legal standing as a manual signature.

Section 7

(1) In any legal proceedings-

(a) an electronic signature incorporated into or logically associated with a particular electronic communication or particular electronic data, and

  (b) the certification by any person of such a signature

Section 7 (cont’d)

shall each be admissible in evidence in relation to any question as to the authenticity of the communication or data or as to the integrity of the communication or data.

What is an Electronic Signature?

An electronic signature is a manual signature in electronic form, for example

What is an electronic signature?

For the purposes of the Electronic Communications Act 2000 ----

An electronic signature is a digital certificate which verifies the identity of an individual.

What is an electronic signature?

They can be used in two ways.

1. Stored in your internet browser

2. Attached to an email

Stored in the internet browser.

This allows an electronic retailer to confirm the identity of a person who is ‘shopping’ on the internet.

example

Email

Electronic signatures can be attached to emails to confirm the identity of the sender.

N.B. Section 7 of the ECA gives an email signed in this way the same legal force as if it was signed by hand.

Associated benefits

Electronic signatures have a very useful associated benefit, which is: ~

totally secure email.

Secure email will be very important for lawyers in the future.

Secure email

Electronic signatures use dual key cryptography

What is dual key cryptography?

Dual Key Cryptography

Every electronic signature has 2 keys associated with it.

1. A private key

2. A public key

Private Key

This is kept by the person sending an email and is used to encrypt the electronic signature.

Public Key

This is sent with the electronic signature and allows the electronic signature to be unencrypted.

Peter’s Private Key

Peter’s Public Key

Dual Key Cryptography

Peter Paul

Effect of the encrypted signature

When the electronic signature is unencrypted, it will: ~

1. Inform the recipient whether the email has been tampered with.

2. Authenticate the email as coming from the person it appears to be from.

Secure email

Secure Email is possible as soon as one person has another’s public key.

An email, and any associated documents, can be encrypted by that public key which can only be unencrypted by the corresponding private key.

Secure Email

Completely secure email is very significant for solicitors as it will allow quick and confidential communication with others.

Problems with Electronic Signatures

There are some disadvantages with electronic signatures.

1. They are not free

2. They do not remove fraud.

Cost?

It is possible to get free electronic signatures, although these are only for individual use. Electronic Signatures for business cost money.

The largest supplier of electronic signatures is called Verisign.

Fraud

As yet in this country there is nothing to prevent another person getting a signature on your behalf and contracting as you.

This is more difficult in America.

The impact of electronic signatures

What impact have electronic signatures had on the world?

Not as much as could be hoped for - yet.

The impact of electronic signatures

E-commerce has increased.

However, would e-commerce have increased anyway?

Probably yes.

The impact of electronic signatures

Electronic Signatures are set to have a major impact on property transfer.

Electronic Conveyancing

This will remove the paper requirements for the buying and selling of property.

A solicitor will act as an agent for property owners and sign all documents electronically on their behalf.

Electronic Conveyancing

Allowing electronic conveyancing has required an important change to the law.

Prior to 2002, all conveyances needed to comply with s2 of the Law of Property (Miscellaneous Provisions) Act 1989.

Electronic Conveyancing

This requires contracts to be made in writing – s2(1).

Electronic conveyancing will not be in writing because it is electronic.

Therefore the law had to be changed

Electronic Conveyancing

This change came in the form of section 91(4)(a) of the Land Registration Act 2002.

This states that an electronic conveyancing document is deemed to be ‘in writing’.

The future of Electronic Signatures

In the future Electronic Signatures will be probably be carried by every individual. They are already being put on smart chips on credit cards.

The future of Electronic Signatures

These smart cards will in the distant future carry lots of other information, for example:

Fingerprints

DNA information

Medical records

Smart Chips