Mr Donald Msiza

Introduction

The evolution of e-commerce has improved the efficiency of business operation, however, while electronic signatures help achieve a much speedier finalisation for commercial matters in today’s digitized economy and most importantly, during the last two years of the deadliest pandemic of our generation, there are transactions for which electronic signatures will present significant challenges.

The Electronic Communications & Transactions Act 25 of 2002 (ECTA/Act) governs the permissibility of electronic signatures in South Africa. The Act makes a succinct distinction between an “electronic signature” and an “advanced electronic signature”.

Section 1 of the ECTA defines “electronic signature” as:

means data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature.

Whereas an “advanced electronic signature” is defined as:

an electronic signature which results from a process which has been accredited by the Authority as provided for in section 37.

It is common course that electronic signatures are used in their standard form to speed up the finalisation of commercial transactions. In a world that is committed to becoming green and Covid-19 free, it makes sense that credit agreements and agreements worth gargantuan amounts of money alike be eligible of being entered into and concluded virtually without the parties to the agreement having to physically meet and or a physical copy of the agreement being physically signed. The principle of functional equivalence dictates that electronic communications and transactions should have the same functionality and equivalence to paper-based communications and transactions, although basic safety measures have to be satisfied for legal validity.

Case law

Spring Forest

In the case of Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash & Another [2015]- JOL 32555 (SCA) the court was ceased with the interpretation of ECTA’s provisions, particularly the application of section 13 (1) and (3).

In terms of section 13 (1), where the signature of a person is required by law and such law does not specify the type of signature, that requirement in relation to a data message is met only if an advanced electronic signature is used.

(2) Subject to subsection (­1), an electronic signature is not without legal force and effect merely on the grounds that it is in electronic form.

Section 13 (3) reads; where an electronic signature is required by the parties to an electronic agreement and the parties have not specified the type of signature to be used, the requirement is met in relation to a data message if:

(a) a method is used to identify the person and to indicate the person’s approval of the information communicated:

and

(b) having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.

The parties in Spring Forest above the appeal before the SCA concerned a trail of emails purporting to consensually cancel written agreements between the parties, which agreements required any “consensual cancellation” to be in writing and signed by them. The parties concluded a written agreement in terms of which Wilberry t/a Ecowash appointed the Spring Forest as its operating agent. The agreement gave the Spring Forest the right to promote, operate and rent out the Wilberry’s Mobile Dispensing Units to third parties. The agreement contained a nonvariation clause providing that no variation or consensual cancellation would be effective unless reduced to writing and signed by both parties.

When Spring Forest could keep up with its rental commitments per the agreement, the parties met to discuss the way forward. Thereafter, the parties consensually exchanged emails intended to map out this way forward and four options were presented to Spring Forest, once of which was to “cancel agreement and walk away”. Spring Forest accordingly elected to cancel and walk away subject to paying the amounts that were due and payable at the time of cancellation. One of the issues before the court was whether the emails that were exchanged by the parties containing the name of the sender below the message constituted an e-signature as contemplated in section 13 (1) & (3) of the Act. The court held that the typewritten name did constitute a signature because it met the functional requirements of a signature. The type-written signature had the effect of authenticating the information contained in the email.

It held that “the Act’s main objective is to enable and facilitate electronic communications and transactions in the public interest. “Electronic communications” is defined as “communication by means of data messages”. “Transaction” is defined to include a transaction of either a commercial or non-commercial nature . . . An email means electronic mail, a data message used or intended to be used as a mail message.”

Therefore, for all situations where a data message (or e-document) is signed by an electronic signature, and the law does not prescribe the use of advanced electronic signatures for the particular situation or transaction, the electronic signature will have the same presumption of enforceability as a handwritten signature.

The court has also considered the usage of an electronic signature where a suretyship was involved in the case of Massbuild Pty Ltd t/a Builders Express, Builders Warehouse and Builders Trade Depot v Tikon Construction CC and another [2020] JOL 48548 (GJ). The issue before court in casu was whether a suretyship, which had been electronically signed, met the requirements for a valid suretyship. The second defendant (Christian JT Robbertze) was supposed to have stood as surety in the principal agreement entered into between Massbuild (the plaintiff) and the first defendant (Tikon Construction), the second defendant, so argued the plaintiff, “signed” the deed of suretyship communicated to him via email (and thus a data message) through the agency of his secretary who appended the former’s electronic signature onto the e-document. Among the issues before the court was whether section 13 (1) & (3) of the ECTA apply, and if so, whether the documents relied upon by the plaintiff comply with the requirements of section 13 (1) & (3). Section 6 of the General Law of Amendment Act 50 of 1956 requires that for a suretyship to be valid, it must be (a) in writing and (b) signed by, or on behalf of, the surety, the court thus held that section 13 (1) finds application on the facts and therefore the signature had to comply with requirements of an advanced electronic signature, thus concluding that a valid deed of suretyship could not have been entered into.

Jakoita Properties

In similar fashion, the court in Aarifah Security Services CC v Jakoita Properties (Pty) Ltd and Others (12994/18) [2020] ZAGPJHC 222 confirmed the principle above, that is where so required by law to sign a document, if an electronic signature is used same must be an advanced electronic signature when it considered whether a pre-emptive right in respect of immovable property may be validly disposed of with just a ‘normal’ signature.  This is a confirmation of section 2 (1) of the Alienation of Land Act 68 of 1981 which provides that no sale of land will be of any force and effect unless it is contained in a written deed of alienation signed by the parties. Per section 13 (1) above, the requirement of a signature required by statute in relation to a data message can only be satisfied by an advanced electronic signature.

Conclusion

In conclusion, it is important to ensure that when signing documents required to be signed by law, that such documents, where signed electronically, are signed in the correct format i.e. with an advanced electronic signature to avoid such documents being invalid & unenforceable. Furthermore, it must be always borne in mind that advanced electronic signatures must be authenticated by an accredited service provider in terms of section 37 of the Act.