Electronic Signatures – Pitfalls To Avoid

What you may consider to be a simple email correspondence, merely discussing the contract, may result in you acquiescing to the variation of a contractual term. 

Purpose of a signature

A person’s signature generally signifies the signatory’s intent to be bound by the content of the document that he or she has signed. However, what constitutes a “signature” is not limited to handwritten signatures but also includes electronic signatures. The courts generally endeavour to recognise and accommodate electronic transactions and data messages in the application of statutory and common law. 

Electronic Communications and Transactions Act

The Electronic Communications and Transactions Act 25 of 2002 (ECTA) gives legal recognition to transactions concluded electronically by email. According to the Act, “electronic communication” is defined as “communication by means of data messages”. An email means “electronic mail, data message used or intended to be used as a mail message between the originator and the addressee in an electronic communication”. ECTA defines electronic signature as “data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature”.

In Spring Forest Trading v Wilberry (725/13) [2014] ZASCA 178 (21 November 2014) the Supreme Court of Appeal (SCA) held that a series of emails sent between contracting parties resulted in the parties validly cancelling the contract. The agreement contained a non-variation clause that provided that no variation or consensual cancellation would be effective unless reduced to writing and signed by both parties. In this case, the SCA held that the parties’ oral negotiations were reduced to writing in the form of emails and constituted an agreement to cancel the contract. The court adopted a pragmatic approach when it considered whether the email method used by the parties fulfilled the function of a signature, i.e. to authenticate the identity of the signatory. According to the Court, as long as the “data” in an email is intended by the user to serve as a signature and is logically connected with other data in the email, the requirement for an electronic signature is met. The Court accepted that the typewritten names of the parties at the foot of the emails, which were used to identify the users, constituted “data” that is logically associated with the data in the body of the emails as envisaged in the definition of “electronic signature”. Therefore, the Court held that the requirement of signature was met and it had the effect of authenticating the information contained in the emails. 

Can all contracts be entered into or be amended electronically?

Although ECTA allows parties to contract by means of data messages, for example email or text messages, the Act provides that certain agreements may not be entered into electronically. This includes, for example, a contract for the sale of immovable property and wills. 

Parties to a contract can also exclude the amendment of their agreements by means of electronic communications. 

It is best to consult with your attorney to ensure that you validly entered into your contract and that you are sufficiently protected against the inadvertent amendment or cancellation of your contractual agreement as illustrated in the abovementioned case law. 

Karen Bezuidenhout
Attorney & Conveyancer at Van Zyl Kruger Inc.
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