Contract Law and Online Agreements: A Modern Perspective

In the modern digital world, companies prefer to communicate formally online. This digital business trend rapidly expands from meeting arrangements to signing legally binding contracts. The tendency to interact via email and apps resulted in the establishment of 'electronic contracts.' Digital agreements are considered the same as written or spoken contracts, even though they are established online. These contracts may be created via emails, special software programs, or virtual intermediaries that are specifically designed for this purpose. This blog intends to discuss contract law and online agreements in the United Arab Emirates.

Online Agreements Prospective Methods 

Contract Law for Non-Profits, commercial, and trade entities is similar. However, digital agreements are widely accepted worldwide with these three common methods for easy accessibility, reliability, and authenticity in business:

Online Agreements Method Browse-wrap

Customers are presented with terms and conditions while browsing a website, generally via a hyperlink, but are not obligated to read them or acknowledge that they have done so. 

The biggest difficulty with the browse-wrap technique is the absence of proof of a user's acceptance of the terms, which exposes companies to the danger that their online provisions and conditions are not part of their contract with their consumers, rendering them unenforceable. 

Online Agreements Method Click-wrap

In this situation, the client clicks to indicate their consent to the terms and conditions, often by hitting the tab "agree" or "accept," which is commonly shown in a dialogue box. Courts favor this strategy over the browse-wrap online contract approach because it provides stronger proof of consent to accept the contract law in the UAE. Regardless, the specifics of each unique click-wrap mechanism will eventually influence a court's conclusion on whether certain click-wrap contracts are binding.

Any click-wrap agreement should be printed, simple to obtain, and readable. The consumer should also be prompted to browse through the terms before accepting. Businesses who want to depend on click-wrap terms and conditions should track when each user agrees with the terms in case it's required as proof.

Online Agreements Method of Digital Signature 

From a legal standpoint, utilizing digital signatures fits nicely into the fundamental principles of contract creation: an offer is made on the conditions specified in the employment contracts in the UAE, and a digital signature accepts it.

While adopting a digital signature procedure for each client might be time-consuming and inconvenient, it increases confidence in the legitimacy and enforcement. Electronic signatures are acceptable proof of agreement acceptance under local law and have become a popular method of signing agreements.

Online Agreements According to UAE Legislation and Perspectives

To stay up with the rise of digital contracts, the UAE has legislation that governs them. According to UAE federal regulations, an agreement is created when one contractual party makes an offer, another contracting party accepts it, and assuming the parties desire to create such an agreement. So, essentially, there must be three elements for all limited and unlimited contracts in UAE: Offer, Consideration, and Intent.

With respect to electronic agreements, the legislation remains unchanged since the UAE Civil Code specifies that intention may be expressed in writing or verbally, none of which allows or prohibits conduct to be carried out digitally.

Authenticity of an Online Agreement in UAE

Digital transaction and commercial law was enacted to control online trade, including digital contracts. According to the law, it is permitted for an offer of acceptance, consent, and intention to be made digitally for the contract to remain valid, and the legitimacy of the agreement in question should not be exposed to a dispute that involves such an arrangement.

The law expands on the preceding and states that if an agreement is formed through a computerized digital medium, such as digital information systems designed to carry out such functions, the deal is still enforceable despite the lack of human interaction between real individuals. Moreover, it stipulates that if a legal agreement is created between an Artificial Medium and a real person, it is only legitimate if that person knows the other party is an Artificial Medium.

Validity of Electronic Signatures for Online Contracts in UAE

It is well understood that for an agreement to be legal, all parties concerned must sign it, confirming their permission and acceptance. In a comparable vein, electronic agreements may demand electronic signatures. An electronic signature includes characters, signs, numbers, speech, or processing systems in a computerized form. Furthermore, this must be linked to digital interactions and marked with a verification goal. An electronic signature may be completed in the following ways:

By hitting an option and accepting the policies and conditions contained in programs, software, updates, and so on;

Entering his or her official name in a field after a contract to indicate their purpose;

Cryptographic signatures, comparable to bank PINs or PIN-protected documents, and XML-based signatures are widely employed. This needs fingerprints that have been digitally recorded.

A digital signature is as trustworthy and comparable to a hand signature as long as parties are fully aware of their acts. However, any reliance on these e-signatures must be fair. There is a list of elements to examine while determining the feasibility and legitimacy of e-signatures. For example, parties relying on the signature must make adequate steps to authenticate the signatory's identity. They ought to scan for any information that suggests the contractual party was rejected owing to the e-signatures. If the parties have previously contracted, they are responsible for ensuring the contract is fulfilled similarly. In addition to these elements, any additional information relevant to the contract and its conditions must be considered. 

Restrictions and Limitations for Online Agreements and Its Subjects

While the trend toward Digital contracts is common and rising, some types of agreements are not acceptable in electronic form due to the risk of abuse and/or the material’s susceptibility. The following types of contracts are often not accepted in digital copy:

Documents related to personal matters, such as marriage, divorcing, adopting a child, etc.

Wills and Grants.

Transfer deeds for immovable property and any transaction involving its purchase, sale, or lease of a property for more than 10 years.

Registration of any rights linked to immovable property.

Documents must be authenticated before the Notary Public or are exempt by law. 

Impacts of Technological Advancements on Contractual Regulations

The public discussion around smart contracts, which are intended as voluntary solutions based on distributed ledger technology, is replete with warnings and high anticipations. The digital world has acclaimed them as software capable of carrying out every phase of the contractual cycle, from creation to enforcement. Several legal academics have expressed concerns about smart contracts' incapacity to capture relational elements of contract regulation and the increased complexity caused by translating an agreement into digital code.

The law concentrates the subject on prospective sectors that might benefit from using digital contracts. It contends that electronic contracts may be a feasible instrument for efficiently addressing consumers' hesitation in activating and executing their standardized and readily provable rights. Electronic agreements can improve business relationships by cutting transaction costs caused by a lack of credibility between vendors. As a result, digital contracts are expected to be more effective alternatives to standard business instruments like letters of credit and an escrow account agreement.

Legal Amendments for Digital Contracts in Dubai Legislative Frameworks

According to the new legal framework, no written agreement may be declared unlawful only because it is in electronic form. The legitimacy of these digital contracts is reliable, which uses the same premise as UAE Federal regulations that specify that a contract signed by a computerized system cannot be denied legitimacy or execution only because of the parties' lack of physical interaction.

The law specifies that a digital signature is considered legitimate if the e-signature employed is suitable for the document created and has shown to meet the relevant functions without further proof. E-signatures are also recognized as acceptable evidence by the current legislation.

Overall, the policies and ordinances governing Digital contracts in the UAE reflect and maintain a legal framework. In general, whether electronic or written, the contract is legitimate and enforceable as long as it is appropriately signed by legal authorities with the requisite knowledge. 

The UAE legislation seems identical to those across the region: digital agreements are legitimate and legally executable, and a digital signature is considered equal to a handwritten signature and is enforceable by law. You may consider a legal advice service in UAE for reliable contract formation services and to avoid hassles in legal procedures.

Final Words

In conclusion, digital agreements in the UAE are protected by the UAE legislation. With the appropriate legal standards, a digital contract will be considered legitimate and binding, regardless of whether it is electronic or physical. As a result, if parties reach an agreement and construct an electronic contract digitally, such agreement will be recognized as legitimate and enforceable, to which the parties must comply. Overall, electronic commerce is expanding, and the legal system must evolve to handle existing uncertainties and meet future problems.

Connect Legal offers credible services for contract formation and handling legal complexities, whether digital or physical agreements, to acquire a smooth and hurdle-free process. We offer ultimate support and expertise with legitimate solutions at a reasonable price. Contact us for more details and quick responses.