COVID-19: EXECUTION OF CONTRACTS -LEGALITY AND ENFORCEABILITY OF ELECTRONIC SIGNATURES

Due to the Lockdown and its consequent impact on businesses, a current consideration for many business owners arranging their affairs with only technological tools is the binding nature and enforceability of data messages and electronic transactions (i.e. email signatures).

The Electronic Communications and Transactions Act 25 of 2002 (hereinafter referred to as “ECTA”) provides clarity on the topic of electronic transactions. The provisions of Section 12 of the ECTA states that data messages can have the same functional equivalent and legal validity as written documents if they are:
• in the form of a data message; and
• accessible in a manner usable for subsequent reference.

ECTA clearly provides that “signed” shall mean a signature executed electronically, including an email signature and/or signature executed by hand with a pen. The information that forms part of a data message does is, in fact, possess legal force if a method is used to identify the person’s approval of the information communicated.
As a result, electronic contracts can be concluded through data messages (i.e. via email or SMS) if they are generated, sent, received or stored by electronic means which include:
• voice – where the voice is used in an automated transaction; and
• a stored record.
In terms of the Jafta v Ezemvelo KZN Wildlife (D204/07) ZALC 84 (1 July 2008) case, it was confirmed that an agreement may be concluded by means of an email or SMS. As a condition, however, it should however be clear that the offer was made and accepted by the respective contracting parties and the parties’ intent must be clear.
ECTA does, however, exclude the use of electronic signatures in the following circumstances:
• An agreement for alienation of immovable property as provided for in the Alienation of Land Act, 1981 (Act No. 68 of 1981);
• An agreement for the long-term lease (longer than 10 years) of immovable property;
• The execution of a bill of exchange as defined in the Bills of Exchange Act, 1964 (Act No. 34 of 1964); and
• The execution, retention, and presentation of a will or codicil as defined in the Wills Act, 1953 (Act No. 7 of 1953).
The abovementioned agreements are required to be concluded by executing your signature by hand with a pen.
Having considered the prevailing law on this topic, business owners (and the public at large) should cautiously approach their responses to communications to avoid the unintended conclusion of agreements by email or SMS. In turn, the same caution should be exercised when intending to enter into agreements through utilising electronic resources by ensuring that all of the conditions are met.

Should you have any inquiries in relation to the exercise of your contractual rights in this respect or generally, you are welcome to send an e-mail to Chanique Rautenbach at chanique@barnardinc.co.za, or to Heike Endres at heike@barnardinc.co.za. Chanique and Heike are associates at Barnard Incorporated Attorneys – Commercial Law Department.

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