The Electronic Communications Act

On 25 May last year, Section 8 of the Electronic Communications Act 2000 came into force. The act clarifies the legal status of electronic signatures and confirms that electronic documents and signatures are just as legally acceptable as their paper equivalents. However, the act did not impose a blanket rule that electronic documents and signatures are always acceptable. The Government wanted to take this one step at a time, by making orders to cover specific areas where existing law requires paper documents or signatures. Section 8 gives ministers powers to remove provisions in existing legislation that prevent the use of electronic communications or storage.

Despite the rapid rise and fall of many e-commerce businesses, there remains a residue of sound online commercial activity. The first UK legislation to address the dawn of the online era is the Electronic Communications Act 2000, which is potentially revolutionary. It facilitates the development of electronic business and opens the door to a variety of online activities. It requires, however, further enabling legislation to effect change to current processes so that they can be offered on the internet. Wherever there is reference in existing laws to the need for "writing" or "signature" or a "document", it has to be amended to include electronic format, the absence of which would make the specific activity unlawful. At first view this approach is somewhat cumbersome, but it is what lawyers are now presented with. Until the most significant statutory provisions are amended by the Section 8 order, much of UK industry and commerce cannot embrace the digital economy.

The Government opted for the statutory instrument "case-by-case" amendment approach to provide certainty to UK business. Thus, a process of identifying those legislative provisions requiring amendment is now in hand, and the Government's work on this issue is being coordinated by the Cabinet Office, which is consulting with industry groups to help identify those laws requiring alteration and also to offer an industry view on the proper priority of such change. Lawyers are in an ideal position to help direct this process.

However, electronic commerce is more pervasive than many lawyers appreciate. E-commerce cannot be said to comprise a single area of law. Company law, for example, has already been tackled in part under the Companies Act 1985 (Electronic Communications Order 2000). This single development will have a huge impact on efficiency and costs relating to communication with shareholders. Other areas requiring urgent review are the Consumer Credit Act, to enable the online application and processing of consumer credit agreements. Companies can now send annual reports to shareholders, and shareholders can then appoint proxies, electronically. Many organisations offer online credit facilities, placing other credit groups awaiting amendments to the Consumer Credit Act at a disadvantage. Conveyancing cannot be undertaken electronically until much of the property-related legislation is similarly amended. Lawyers, then, must be mindful that the intent behind the Electronic Communications Act necessarily impacts upon other areas of activity and legal governance. The involvement of lawyers in terms of their direct experience of applying relevant statute in client matters could reveal significant issues to take on board prior to the formulation of a draft order. The uncertainty that currently prevails may damage the scope for innovation in business which the act seeks to set free. An unstructured, piecemeal development of laws, unless based on industry demands, is a recipe for chaos.

For lawyers who believe the development of e-commerce exists in a vacuum, think again. Its reach will extend far and wide, and this profession must contribute to its evolution.

Andrew Sparrow, a partner at Lee Crowder, is heading the eCentre UK-Cabinet Office liaison on the alteration of laws pursuant to the new Electronic Communications Act.