Electronic Contract Best Practices: Indonesia

• Published date: 21 December 2022
• Subject Matter: Corporate/Commercial Law, Privacy, Contracts and Commercial Law, Data Protection
• Law Firm: Rouse
• Author: Mr Kin Wah Chow, Evi Triana and Dian Esterina Tambunan

This note discusses issues on electronic contract formation in Indonesia and proving click wrap agreements.

Contract Formation under the Indonesian Civil Code

At the outset, it is necessary to understand the basic requirements of contract formation in Indonesia.

The Civil Code in Article 1320 stipulates in the general term that "there must be consent of the individuals who are bound thereby". The Indonesian Civil Code does not specifically stipulate paper documents or wet ink signatures. But this is what the Indonesian courts have come to expect in order to prove the existence of a contract.

The conventional view of a valid contract is therefore that captured in a formal document with both parties appending their wet ink signature onto a paper document. This view is not likely to change in the near future. So, it will not be possible to apply common law concepts of contract formation such as contract by conduct or contract by correspondence - where the act of assent is not captured in the same document.

The above sets the backdrop in the following discussion on the validity and enforceability of "electronic contracts" which by its very nature seeks to do away with the above traditional notion of contract under the Civil Code.

ITE Law

Electronic contract first gains its recognition under Law No. 11 of 2008 on Electronic Information and Transactions (the "ITE Law") in Article 18 Paragraph (1):

Article 18

• Electronic Transactions which are made into an Electronic Contract are binding on the parties.

The thinking back then was that signatures were still required albeit in electronic form. Article 11 of the ITE Law provides for the legality of electronic signatures:

Article 11

• Electronic Signature has valid legal force and legal consequences as long as the following requirements are met:

1. the Electronic Signature creation data is only related to the Signer;
2. the Electronic Signature creation data at the time of the electronic signing process is only in the Signer's possession;
3. all changes to the Electronic Signature which happen after the signing are discoverable;
4. all changes to the Electronic Information which are related to the said Electronic Signature after the signing are discoverable;
5. there is a certain method that is used to identify who is the Signer; and
6. there is a certain method that can show that the Signer has granted their approval in regard to the relevant Electronic Information.

• Further provisions regarding Electronic Signature as referred...