E-Contracts in the GCC


The purpose of the present paper discusses E-contracts with specific reference to how e-contracts affect the legislative tenets in Kuwait’s law. In particular, the paper shall focus on the definition of e-contracts, formation, and legalities. Additionally, provide a comprehensive understanding of how e-contracts affect parties in a free market including consumer protection rights and personal data including electronic signature, electronic payment, and regulations on the electronic platforms.

  1. E-contracts
  2. E-contracts

E-contract is described as an online contract which is formed as a result of e-commerce. E-commerce is the interaction between two people either buyer or seller through electronic means (“Formation of Electronic Contracts” 83). These include e-mails or communications through electronic agents such as computer programs and two electronic agents programmed to recognize the trade in the presence of a contract. Any regulations and legalities within transactions under the e-contract are contained within the Uniform Computer Information Transactions Act which is universally recognized.

  1. Legality of E-contracts

An e-contract to be effective should contain essentials that encompass offer, acceptance, legal consideration and intention to create legal relations. These tenets are necessary for the formation of an e-contract regardless of the contract being an international or locally based contract. An offer is referred to as the intention to form an e-contract through a transaction. For there to be an offer, there must be at least two parties involved (“Formation of Electronic Contracts” 91). Another tenant of e-contracts is the acceptance factors. Acceptance is the undertaking of the parties involved to transact based on the offer in position. As such, for there to be a continuance in the transaction, legal considerations have to be regarded. Lawful consideration is the enforceable laws that facilitate the limitations of each party based on what is legal and what is not (“Formation of Electronic Contracts” 92). For instance, pornography is regarded as illegal in Kuwait and transaction on such grounds can invoke prosecution actions from a court of law. Also, a tenant of the e-contract is the intention to create legal relations (“Law No. 20 of 2014 Concerning” 5). The law is regarded as the pivotal factor that regulates any offers and transactions between the parties. Failure to utilize the tenet can result in un-natural actions for both parties with tremendous consequences.

Additionally, other tenets include the competency of the parties, free consent, lawful object, and certainty as well as the possibility of proper performance. The mentioned tenets emphasize the importance of an e-contract when trading online between parties. Competency of the parties relates to the factors including age- where the individuals involved should be of legal consenting age-, the parties should be mentally capable of handling a transaction and insolvency is critical in areas of criminal entities being involved in the trade (“Formation of Electronic Contracts” 93). Further, there are aspects of free consent where the parties are to have open and genuine permission to the contract. Any indications of coercion, misinterpretation as well as undue influence and fraud could regard the e-contract null and void.

Also, an e-contract formation contains the lawful object factor. This indicates that the legalities of the contract ought to be lawful which presupposes the lawfulness of the deal. For example, the sale of narcotic drugs or pornography in Kuwait is illegal; thus, it makes the contract void (“Formation of Electronic Contracts” 93). Finally, the formation of any e-contract should contain the certainty and possibility of proper performance. Any e-contract within the sovereign state of Kuwait ought to hold inevitability and leeway of performance. A contract is only enforceable which means it should not be vague or ambiguous. Both parties should understand the legal confines of the e-contract and what each undertaking means both from a party right and constitutional rights of the state.

  1. Formation of e-contracts

E-contract formation can occur in multiple ways including creation through e-mail, telefax, and websites. Regulations are governing the formation of e-contracts online regardless of the format being used. For rules applying to the formation of e-contracts through telex and telephone, it is necessary for the parties to discuss the terms of the contract in a language that both parties articulate clearly (“Formation of Electronic Contracts” 94).

Another form of an e-contract is through e-mail. An e-mail is a preferred method compared to the former telefax and telephone (“Formation of Electronic Contracts” 8 4). Nonetheless, when it comes to e-mail there are pertinent issues including whether the country accepts postal rule through e-mail e-contracts and when exactly does the law on acceptance of an e-contract take effect through e-mails.

Finally, there is the aspect of e-contract through websites. The acceptance that trade and transactions are occurring through websites has increased over the years. Purchases through the site can either be simple and straightforward or complex and complicated. Investments through the website entail a process where the consumer goes to the retailer’s website and downloads a digital product including music or videos or software(“Formation of Electronic Contracts” 84). On one end, the purchase of a product is simple where the buyer can either accept to purchase or decline. On the other hand, a purchase can be made at a later date where the buyer can acknowledge that the seller will do so. This type of e-contract is complex because issues of competency can arise impacting whether the transaction can happen or not.

  1. Law Protection of Consumers on E-Contract

The law can protect the consumers under the e-contract law that is stipulated in the constitution. The process is elaborate and comprises of justified legal confines through which the seller is required to follow through with the transaction unless stated otherwise. In Kuwait, the e-contract law governing the protection of consumers is Law No. 20 of 2014 concerning Electronic Transactions. In other countries, such as the United Arab Emirates, the law governing the protection of consumers is the Federal Law No. (1) of 2006 (4). Other countries such as Oman have the Electronic Transaction Law while Qatar has the Resolution of the Supreme Council of Information and Communication Technology regarding the by Law regulation of certification service providers “Electronic Transactions Law” 3).

The regulations provide explicit elucidation of the terms involved in e-contracts and how to go about it in cases of violation or non-compliance to the law. The laws, in particular, define the terminologies that are associated with e-contracts. This is how the country and the constitution defend the consumer by acknowledging which parties are involved and what other terms are included. They range from the electronic message, creator, addressee, electronic signature and electronic payment among others. Moreover, the law also protects the consumer by determining the acceptable terms of the transaction and what is not are.

  1. Kuwait’s Transaction Law and GCC Transaction Law

Kuwait’s and GCC transaction laws concerning e-contracts are similar in many ways but, have differences in some legal aspects. From a similarity point of view, the rules contain a preamble that expounds on the terminologies and the parties involved in any e-contract transaction. For instance, vocabularies including an electronic, electronic agent, information system and information as well as an electronic signature tool (“Law No. 20 of 2014 Concerning” 10). However, it should be noted that each country addresses its general provisions based on the type of e-contract and e-commerce that is accepted. For example, the difference between the general provisions in Kuwait’s transactional law includes protected electronic signature, electronic signature and automated electronic system (“Law No. 20 of 2014 Concerning” 10). On the other hand, Qatar’s general definitions include certifying person, reliable, consumer and encryption. Whereas, Oman contains competent authority, electronic and electronic data interchange “Electronic Transactions Law” 4). The hypothesis on the definitions is that each country’s perception of an e-contract is based on the type of constitutional transactions.

The application of the law in Kuwait is mandated under constitutional law. This implies that transactions based on civil, commercial and administrative operations are acceptable (“Law No. 20 of 2014 Concerning” 10). The law encompasses aspects of personal status, endowment, and wills as well as real estate. The confines of the law are similar to the GC countries including Qatar, United Arab Emirates (Federal Law No. (1) of 2006 on Electronic Commerce and Transactions 4) and Oman. However, Bahrain has a different perspective on the application of the law. Bahrain’s application of the law is confined to the Sharia law with accommodation of non-Muslim individuals based on marriage, divorce, and custody of the children (“Legislative Decree”).

Further, Kuwait’s law does not require the provision of a license to any service provider. The law does not have any regard for the service provider as noted in the law. The premise for recognition of any transaction is stated in the article (3) where any form of contract is legal whether in written form or not (“Law No. 20 of 2014 Concerning” 10). On the other hand, Qatar’s law in Chapter 2 article (2) determines that there should be a licensing certification of service providers.  The other GC countries have similar concepts with Qatar regarding offering a license to any service provider which are more stringent compared to Qatar.

Another difference between Kuwait and the GC countries is that Kuwait’s law focuses on consumer protection whereas, the GC countries focus on both the consumer and the provider. Kuwait’s elaborative Law No. 20 of 2014 concerning Electronic Transactions emphasizes on how to protect the consumer through clear documentation of the obligations of the contract and the parties involved (“Law No. 20 of 2014 Concerning” 5). On the other hand, the GC countries provide elaborate documentation of the roles that the service provider should perform, what are the obligations for both the consumer and the provider as well as the penalties. In retrospect, it is clear that Kuwait’s law is not as expansive as the GC Countries.

  1. Importance of Personal Data

Personal data ranges from the information of names, postal and email addresses and passwords as well as telephone information. It also includes information about an individual’s driving license, baking account, and passport. In virtual territories, this includes biometric data, web cookies, mobile device identification information and other information about usage. The importance of personal data is that it used to identify a person. The isolation of any individual based on the ‘certain circumstances’ are critical in knowing what the person is all about. Moreover, personal data improves the protection of the rights and fundamental freedoms of an individual from a governmental level to a business level.

In Law No. 20 of 2014 concerning Electronic Transactions, Kuwait’s law in the article (32) and (34) includes the clear explanation of how privacy and protection of personal data are conducted (“Law No. 20 of 2014 Concerning” 22). The law stipulates the entities required to protect data as well as their roles and obligations — for example, governmental bodies, agencies, public institutions, companies, and non-governmental bodies. The entities are required to possess personal data stored in the form of electronic information registered under the government-sanctioned processing systems. Article (35) stipulates what the entities are required to do with the information including access of the information by third parties and what legal limits they are allowed to use the information (“Law No. 20 of 2014 Concerning” 23). Further, the article reiterates on the type of penalties that would be instituted when violations are noted.

  1. Regulation of Electronic Signature

Kuwait’s Law No. 20 of 2014 concerning Electronic Transactions extrapolates the legal boundaries on electronic signature housed in the article (18) to the article (25). Article (18) states the importance and application of an electronic signature (“Law No. 20 of 2014 Concerning” 16). It states that the identification of a signatory is necessary within any transaction under e-contract. Subsequently, Article (19) reiterates that parties involved in the e-contract ought to use the protected electronic authentication certificate as a legal platform to impose limitations and conditions of transactions (“Law No. 20 of 2014 Concerning” 16). This includes the validation of the signature and the powers of the signature invalidation of the certificate and therefore, the contract.

Kuwait’s Law No. 20 of 2014 concerning Electronic Transactions in the article (21) and (22) explains the duties of a signature in any transaction. Paramount duty entails taking proper precautions where the signature should not be used for illegal undertakings (“Law No. 20 of 2014 Concerning” 16). Failure to comply with this is sufficient evidence to dispute any transaction. All information containing signatory power is delegated to the Public Authority for Civil Information. The body is tasked with authentication of signatures within the law and state of Kuwait. Nonetheless, the use of the signature is limited when the service provider is not a competent authority or is not licensed under the Kuwait constitution.

  1. Regulations of Electronic Payment

Kuwait’s Law No. 20 of 2014 concerning Electronic Transactions regulates electronic payment through chapter six encompassing articles (28) to (31). The regulations define any electronic payment as money transfer via electronic platforms. To facilitate any transactions within the country, article (29) identifies the laws that govern any financial institutions capacity to conduct operations (“Law No. 20 of 2014 Concerning” 20). These include adherence to the provision of the law No. 32 of 1968 concerning cash transactions and regulation of banking professionalism and competency.

Additionally, it involves the aspects of anti-money laundering and counter-terrorism financing. The law also stipulates concerns on taking necessary precautions in ensuring safe transactions for the customers. These involve secrecy in privacy data and protection of consumer rights. For instance, article (30) mentions the limitations in sales protecting the consumer of any illegal sales and their freedom in culminating the transaction (“Law No. 20 of 2014 Concerning” 20). Also, the bank or financial institution is required to inform the consumer of any illegal activities concerning their bank accounts.

For an electronic payment, Kuwait’s Law No. 20 of 2014 concerning Electronic Transactions article (31) under Chapter 6 reiterates that the Central Bank of Kuwait is mandated to regulate any transactions. This includes monitoring and controlling any form of the illegal trade as well as formal sales within the country’s financial institutions (“Law No. 20 of 2014 Concerning” 20). The purpose of this is to safeguard the consumers from any illegal money transfers or laundering and fraud.

  1. Regulation of Electronic

According to Kuwait’s Law No. 20 of 2014 concerning Electronic Transactions, electronic is defined as any data relating to electrical, digital, magnetic and electromagnetic potential that is wireless and wired. Regulations of electronics are factored in the article (2) chapter two in general provisions. Electronic law states the types of electronic information that is accepted including electronic messages, message transaction, documents, and signatures (“Law No. 20 of 2014 Concerning” 10). The law is not clear on what constitutes an electronic. However, it proposes that individuals who use electronic are liable for any legal and illegal undertakings. Article (3) and article (4) determine that electronic records and transaction messages ought to have consent from the person including the offeror and the seller. However, there are circumstances under which electronic dealing is explicit and limit the rights of the consumer (“Law No. 20 of 2014 Concerning” 10) Thus, article (5) emphasizes on approval, acceptance, and grounds of amendment of any transaction in favor of both parties.


Work Cited

Legislative Decree, “Legislative Decree No. 28 of 2002 with Respect to Electronic Transaction- Bahrain.” P. 31/48.

“Law No. 20 of 2014 Concerning Electronic Transactions.” Central Agency for Information Technology, Pp. 11-31.

“Electronic Transactions Law.” Oman, pp. 1-17.

“Resolution of the Supreme Council of Information and Communication Technology (ictQATAR) Regarding the Bylaw Regulating the Work of Certification Service Providers.” Pp. 1-20.

“Federal Law No. (1) of 2006 on Electronic Commerce and Transactions- UAE.” pp. 1-24.

“Formation of Electronic Contracts: Contracts in the Context of Information Technology.” Chapter 3, pp. 80-135. [web]. http://shodhganga.inflibnet.ac.in/bitstream/10603/49009/11/11_chapter%203.pdf Accessed 6 April 2019.