Analyze in details the legal framework of electronic contracts in Mainland Tanzania.

Table of Contents

1.1  Introduction

1.2 Main Body

2.2 The Legal Framework of Electronic Contracts in Mainland Tanzania

2.2.1 The Law of Contracts Act

2.2.2 The Electronic Transactions Act

2.2.3 The Evidence Act

3.1 Conclusion

 

1.1 Introduction

As per section 2(1) (h) of the Law of Contracts Act[1], a contract is any agreement enforceable by law. Section 10 of the same Act indicates important elements in forming a valid contract by specifying that, all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void by LCA or any other law. Normally, in past few decades and as per the existed legal framework in Tanzania, contracts were written in papers and signed physically by parties who consent terms of those contracts. But due to the development of science and technology, the coming of computers and simplified means of communications changed the practices which were common in making and signing agreements. The technologies introduced electronic contracts which are also known as e-contracts where parties are capable of entering into contracts without physical interaction. Technology made it possible for contracts to be prepared, submitted to parties and signed all together electronically without physical interaction of parties. These technologies introduced a legal gap in contract laws as the laws were silent concerning e-contracts.

Due to the increased electronic transactions and the evolving nature of modern commerce and the increasing reliance on digital technology, in 2015 Tanzania made its first legislation which paved a way for legally recognized and protected electronic transactions emanating from e-commerce, mobile money transfer and e-contracts. The Electronic Transactions Act[2] influenced amendment of The Law of Contacts Act[3] where amended LCA recognized the applicability and legality of electronic contracts in Tanzania[4]. Again, The Evidence Act[5] was amended to provide additional clauses as to the admissibility of electronic evidence in the courts of law. All these amendments established a legal regime of electronic contracts as the main legislation governing contracts already recognized electronic contracts, but the electronic funds which are considerations of those e-contracts were now governed by Electronic Transaction Act. In case of disputes, the Evidence Act allowed parties to present electronic evidence whether e-contracts or money transfers as exhibits before court of laws.

2.1 Main Body

2.2 The Legal Framework of Electronic Contracts in Mainland Tanzania

This part of the work will analyze the legal framework governing electronic contracts in mainland Tanzania. By analyzing the relevant laws and regulations, this work will identify gaps in the current legal framework and suggests relevant reforms.

2.2.1 The Law of Contracts Act

A period before 2019, the e-contracts were not recognized under the existed Law of Contracts Act[6] hence they were unenforceable before court of law. The amendments of the Law of Contracts Act in 2019 came with new provisions which recognized the electronic contracts in Tanzania. Take an example of paragraph two of section 10 of the LCA of 2019 provides that; -

 “Provided that, nothing herein contained shall affect any law in force, and not hereby expressly repealed or disapplied, by which any contract is required to be made in writing or in electronic form or in the presence of witnesses, or any law relating to the registration of documents.”

The entire section describes which agreements are contracts and the elements which constitutes a valid contract. The section describes that, agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void. But the second paragraph adds that, nothing in this provision affects the requirements of contracts established by other legislations on whether such contracts should be in written form or electronic. This means that, the LCA accepts electronic contracts in the same manner as paper contracts together with other requirements of specific kind of contracts as established by other legislations.

Examples of contracts with special requirements is land related contracts which are mandatory required to be in written form and not electronic[7]. Furthermore, as per section 25(1) of the Law of Contract Act, all contracts with no consideration are required to be in writing and be signed and registered. Section 6 (1) of the Sale of Goods Act[8] requires a contract of sale of any goods of the value of two hundred shillings to be in writing and be signed by the party to be charged or by his agent in that behalf for it to be enforceable[9].

2.2.2 The Electronic Transactions Act

This Act establishes the legal framework for recognition of electronic transactions, e-Government services, the utilization of Information and Communication Technologies for evidence collection, the admissibility of electronic evidence, to provide for the facilitation of use of secure electronic signatures. It also addresses various related matters such as electronic contracts, e-commerce and electronic money transfer. The Act introduced several provisions which support the existence of e-contracts in Tanzania.

Section 21 of the Act provides that, “For avoidance of doubt, a contract may be formed electronically unless otherwise agreed by the parties. Where an electronic record is used in the formation of a contract, that contract shall not be denied validity or enforceability on the ground that an electronic record was used for that purpose.” This provision recognizes that contracts may be contracted by parties electronically without affecting the validity of those contracts unless if the elements of valid contract as per LCA are not adhered.

Section 24 of the Electronic Transactions Act establishes rules for determining the locations of dispatch and receipt of electronic communications between the originator and addressee. By default, an electronic communication is considered dispatched at the place of business of the originator and received at the place of business of the addressee. This rule applies irrespective of whether the parties are at their usual places of business and is also relevant for determining the location where a contract was concluded for taxation purposes. The section recognizes that entities may have multiple places of business, and in such cases, the relevant place is determined based on the closest relationship to the underlying transaction or, if no transaction exists, the principal place of business.

For individuals without a place of business, their habitual residence is considered the place of business. Similarly, for a body corporate without a place of business, the determination is based on the business address or the place of incorporation or legal constitution. Importantly, Section 24 applies regardless of the location of the computer system supporting an electronic address, ensuring consistency even if the system’s location differs from where the communication is deemed dispatched or received. These provisions offer a framework for establishing the locations of electronic communication transactions in the absence of explicit agreements between the parties involved.

Section 25 of the Act[10] governs the time and place of contract formation in electronic transactions. Specifically, it states that when parties engage in an electronic contract, the contract is deemed formed at the precise moment when the acceptance of the offer becomes effective. In addition, the section specifies that an offer transmitted as an e- communication becomes effective at the time it is received by the offeree.

Section 26 of the Electronic Transactions Act addresses contracts established through the interaction of interactive systems and individuals. The provision asserts the legal validity of such contracts, emphasizing that their effectiveness cannot be denied merely because no person reviewed each action conducted by the interactive systems. Interactive systems, as per this section, are mandated to offer individuals the opportunity to rectify input errors in electronic communications exchanged with the interactive system of another party. Importantly, if a person makes an input error and the interactive system does not facilitate correction, the affected party retains the right to withdraw the electronic communication under specified conditions. These conditions include prompt notification of the error, an intention to cancel the contract or rectify the input error, and adherence to reasonable steps instructed by the other party regarding goods or services received due to the error[11].

In the situation where a person has prepaid for goods or services before exercising the right to withdraw, Section 26(4) grants the individual entitlement to a full refund within thirty days upon canceling the transaction. It’s noteworthy that the provisions of this section do not override the application of other laws governing the consequences of errors during the formation or performance of contracts. This ensures a comprehensive legal framework for contracts formed through interactive systems, balancing the rights and responsibilities of parties involved.

2.2.3 The Evidence Act

The Evidence Act revised edition of 2022 came with a lot of changes which incorporated a term “electronic” in most of its provisions. Section 3 of the former Evidence Act was amended where a term document was defined to include electronic documents. As per section three of the amended Act, a document means any writing, handwriting, typewriting, printing, photostat, photography, computer data and every recording upon any tangible thing, any form of communication or representation including in electronic form, by letters, figures, marks or symbols or more than one of these means, which may be used for the purpose of recording any matter provided that recording is reasonably permanent and readable. This provision incorporated electronic document in the statute and gave them a same status as paper documents[12].

Section 19 of the Evidence Act[13] which is defining a term “admission” was also amended by inserting a word “electronic” immediately after the word “oral”. Before amendment, admission was defined as a statement, oral or documentary, which suggests any inference as to a fact in issue or relevant fact. After amendment, electronic statements or documents were also incorporated to form part of evidence which may be presented before court of law. This provision permits the use of electronic evidence in courts of laws.

Section 34 of the Act was amended to incorporate a term “electronic’ immediately after a word written. Before amendment, section read as follows; -

“Statements, written or oral, of relevant facts made by a person who is dead or unknown, or who cannot be found……………”.

The amended section read as follows; -

“Statements, written or electronic or oral, of relevant facts made by a person who is dead or unknown, or who cannot be found……………”.

The amended section expands the scope of this section by incorporating electronic statements of persons who cannot be called before court to testify facts for either being dead or dumb or physical incapable. Their electronic statements are admissible[14].

The introduction of section 64A of the Evidence Act which was formally not present, recognized electronic evidence in court of laws. This provision accepts all electronic transactions, or records or activities to be used before court of law to prove facts.

The amendments to the Evidence Act of Tanzania, particularly in Sections 3, 19, and 34, along with the introduction of Section 64A, collectively support and facilitate the recognition and admissibility of electronic contracts and evidence in the country’s legal system. These changes demonstrate a commitment to keeping pace with technological advancements and ensuring that the legal framework is equipped to handle electronic transactions and communications[15].

3.1 Conclusion

Electronic contracts, also known as e-contracts, are agreements formed and executed using electronic means. While they offer convenience and efficiency in the digital age, there are several legal weaknesses associated with them. One of the primary challenges is the issue of authentication and identification. Traditional contracts often involve physical signatures, providing a tangible and widely accepted method of verifying the parties’ intent. In digital contracts, electronic signatures may not carry the same level of universal recognition and could be vulnerable to fraud or disputes over authenticity. Another significant legal weakness pertains to the lack of standardized regulations governing electronic contracts globally. Different jurisdictions may have varying legal frameworks, making it challenging to establish a uniform set of rules for the enforcement of e-contracts across borders. The absence of an internationally recognized legal framework can lead to uncertainty and potential conflicts when disputes arise, as parties may struggle to determine which jurisdiction’s laws should apply.

Moreover, issues related to data protection and privacy are crucial concerns in electronic contracts. The collection and processing of personal information in e-contracts may raise privacy issues, and the adequacy of data protection measures becomes a critical consideration. Without clear and consistent regulations, there is a risk of inadequate safeguards for sensitive information, potentially leading to breaches or unauthorized access. Additionally, accessibility and understanding of electronic contracts pose challenges, particularly for individuals who may not be familiar with digital technologies or legal language. Ensuring that parties have a clear understanding of the terms and conditions in an e-contract is vital for its enforceability. The absence of standardized methods for presenting and explaining complex legal concepts in electronic contracts may result in misunderstandings and disputes.

Furthermore, the dynamic nature of technology introduces the risk of insecurity in the systems used for creating and storing electronic contracts. As technology evolves, it is essential to address concerns related to the long-term preservation, integrity, and security of electronic contract records. Failure to establish proper standards in these areas may compromise the reliability and evidentiary value of electronic contracts in legal proceedings.

To address these weaknesses, there is a need for concerted efforts at both national and international levels. Harmonizing legal standards, improving authentication methods, enhancing data protection measures, and promoting digital literacy are essential steps. Establishing an internationally recognized legal framework for electronic contracts can contribute to legal certainty and facilitate cross-border transactions, fostering a more secure environment for electronic commerce.

 

 

 

 

 

 

BIBLIOGRAPHY

Books

Beatson, J. Anson’s Law of Contract, 27th Edition. Oxford Publishing. New York (1998)

C Glatt Comparative Issues in the Formation of Electronic Contracts, International Journal of Law and Information Technology. (1998)

Cheshire, et al, Law of Contract, Sweet and Maxwell, 13th (1996)

Legislations

Land Act, No 4 of 1999

Sale of Goods Act, CAP 214 RE 2002

The Law of Contact Act, CAP 345 RE 2019.

The Electronic Transactions Act, No 13 of 2015

The Evidence Act, CAP 6 RE 2019.

The Law of Contact Act, CAP 345 RE 2002.

Dissertations

Mwita. D.N (2011), “Electronic Contracts in Tanzania: An Appraisal of the Legal Framework” LL.M Dissertation St. Augustine University of Tanzania\

Magalla, A (2017) “Cyber Contracts in Tanzania under the Electronic Transaction Act, No.13 of 2015” An Independent Research, Dar-es-salaam. https://shorturl.at/ct589

Websites

Easy Tech Junkie, “What are the Different Types of Interactive Systems?”, https://shorturl.at/sRXY6 accessed January 13, 2024

Mosha, K “The Legal Framework Governing Electronic Signatures in Tanzania” https://kgpartners.co.tz/the-legal-framework-governing-electronic-signatures-in-tanzania/ accessed January 13, 2024

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[1] The Law of Contact Act, CAP 345 RE 2019.

[2] The Electronic Transactions Act, No 13 of 2015

[3] ibid

[4] Mosha, K “The Legal Framework Governing Electronic Signatures in Tanzania” https://kgpartners.co.tz/the-legal-framework-governing-electronic-signatures-in-tanzania/ accessed January 13, 2024

[5] The Evidence Act, CAP 6 RE 2019.

[6] The Law of Contact Act, CAP 345 RE 2002.

[7] See section 64 the Land Act, No 4 of 1999

[8] Sale of Goods Act, CAP 214 RE 2002

[9] Mwita. D.N (2011), “Electronic Contracts in Tanzania: An Appraisal of the Legal Framework” LL.M Dissertation St. Augustine University of Tanzania

[10] ibid

[11] Easy Tech Junkie, “What are the Different Types of Interactive Systems?”, https://shorturl.at/sRXY6 accessed January 13, 2024

[12] C Glatt Comparative Issues in the Formation of Electronic Contracts, International Journal of Law and Information Technology. (1998)

[13] Magalla, A (2017) “Cyber Contracts in Tanzania under the Electronic Transaction Act, No.13 of 2015” An Independent Research, Dar-es-salaam. https://shorturl.at/ct589

[14] Beatson, J. Anson’s Law of Contract, 27th Edition. Oxford Publishing. New York (1998)

[15] Cheshire, et al, Law of Contract, Sweet and Maxwell, 13th (1996)