An Overview of The Business Laws (Amendment) Act, 2020

On 8th March,2020, the Business Laws (Amendment) Act, 2020 was enacted amending various statutes with the aim of easing business transactions in Kenya. For purposes of this paper, we shall only focus on the amendments on Section 3 (3) Law of Contract (the “LAC”) and section 35 of the Companies Act.

Section 3 (3) of the LAC was revised by introducing electronic signatures as a means of executing documents where previously it provided for a physical signature.

Additionally, it eliminated the requirement of affixing of a Company Seal under section 35 of the Companies Act in the execution of documents and provided that two authorized signatories or a director of the company (in the presence of a witness) may sign a document on behalf of a company.

The amendments are positive as they embrace technological advancements by minimizing the need of physical movement. However, the amendments failed to address the accepted mode of attestation, whether the advocate would be required to be in the same jurisdiction as the person electrically executing or it is acceptable for the advocate to be outside the jurisdiction.

This provision may cause perplexity in the interpretation of section 3 (3) of the LAC in respect to attestation and the enforceability of a contract executed in such circumstances. The clarity of this amendment is a necessity to avoid frivolous and plentiful conflicts.

Consequently, it is advisable for parties to agree on the jurisdiction issue in relation to attestation at the initial stages of entering into an agreement for sale. The agreement may expressly provide for the agreed terms in the attestation clause to prevent disputes during the transition period of implementing the new changes.

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