Contracting and Digital Signature

In most cases, physical signatures are not a necessary formality to give validity to a document in Hong Kong. Exceptions include transactions involving land, deeds (which must be executed under seal) and assignments of copyright. Even though signatures are not usually necessary to give a contract formal validity, in the physical world, they are the main method of evidencing the fact that an agreement has been reached. Issues in relation to digital authentication of online contracts are discussed further below.

The Ordinance does however provide that where a rule of law requires a signature of a person, that requirement is met by a digital signature (subject to certain specific requirements set out in the Ordinance). Section 6 of the Ordinance does afford statutory recognition for a digital signature if it is supported by a certificate issued by a recognized certification authority (CA) and within the validity of that certificate. If the CA is recognized pursuant to the Ordinance and does provide compliant keys and certificate with the requirements of the Ordinance, then the electronic messages and digital signatures will bind parties without further evidence.

The definition of digital signature in Hong Kong law is given under Section 2 of the Ordinance as follows: "digital signature" in relation to an electronic record means an electronic signature of the signer generated by the transformation of the electronic record using an asymmetric cryptosystem and a hash function such as that a person having the initial untransformed electronic record and the signer's public key can determine (a) whether the transformation was generated using the private key that corresponds to the signer's public key; and (b) whether the initial electronic record has been altered since the transformation was generated.

A digital signature is an encryption of the text of an electronic message that is appended to the message itself. Therefore, a digital signature is unique in each instance. Basic electronic signatures, or an electronic version of ones written signature, can be easily forged, a fraudster need only type another person's name or cut-and-paste over another signature file. Thus, digital signatures are the preferred way of signing electronic documents.