Electronic Signatures and Emails

In Spring Forest Trading 599 CC v Wilberry (Pty) Ltd T/A Ecowash and Another , the Supreme Court of Appeal (SCA) ruled that the parties to an agreement that contained a non-variation clause (providing for cancellation to be in writing and signed by the parties) could vary the agreement through an exchange of emails.

The SCA also found that typewritten names of the parties at the foot of emails constituted ‘data’ that was logically associated with the data in the body of the emails, as envisaged in the definition of an ‘electronic signature’ [which is not to be confused with an advanced electronic signature] in ss 13(1) and (3) of the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”).

In terms of section 13(3) of ECTA: 

“Where an electronic signature is required by the parties to an electronic transaction and the parties have not agreed on the type of electronic signature to be used, that requirement is met in relation to a data message if:

(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.”

Thus, where a contract requires written confirmation of a variation of a contract, an exchange of emails (which constitutes writing in terms of ECTA) with the parties’ typewritten names at the bottom would comply with the requirements section 13(3).

In Global and Local Investments Advisors (Pty) Ltd v Fouche 2021 (1) SA 371 (SCA), the issue for determination was whether Global, a financial services provider, breached a mandate in terms of which it was authorised to invest and manage money entrusted to it by the respondent, Fouché, by releasing funds in response to fraudulent emails, ostensibly sent by the latter. Fraudsters hacked Fouché’s Gmail account and utilising his authentic email credentials, sent three emails to Global to transfer specified amounts to accounts of named third parties at First National Bank. The SCA found that they emails were fraudulent and were not binding on Mr Fouché. Global had to compensate him.

The court found that Spring Forest is distinguishable from this case for the following reasons: “The authority of the persons who had written and sent the emails was not an issue in that case as it is in the present case. The problem, in that case, was whether an exchange of emails between the contracting parties could satisfy the requirement imposed by them in the contract that ‘consensual cancellation of their contract be ‘in writing and signed by the parties. There was no dispute regarding the reliability of the emails, accuracy of the information communicated or the identities of the persons who appended their names to the emails. In the present case, the emails in issue were, in fact, fraudulent. They were not written nor sent by the person they purported to originate. They were fraudulent as they were written and dispatched by person or persons without the authority to do so. Therefore, they are not binding on Mr Fouché.” 

Take care that if you conclude a contract that requires a signature for any purpose, specify whether or not an electronic signature will be compliant. Also clarify what form of electronic signature will be acceptable. 

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