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BUSINESS NEWS - In a world where things have to happen faster than ever, the law can often be a frustratingly slow follower. The traditionally cautious workings of our legislators, and the subsequent interpretations of these laws by our courts, can take time to establish precedents and certainty.
The signing of immovable property agreements and the interpretation of applicable legislation still require the intervention of our courts from time to time.
The Electronic Communications and Transactions Act 25 of 2002 (ECTA) governs the electronic signing of contracts. It makes a distinction between an ‘electronic signature’ (for example a digital or scanned signature, signing with an e-pen on a tablet, a name at the bottom of an email or ticking a designated box on a website), and an ‘advanced electronic signature’ (which requires formal authentication through an accreditation process by the South African Accreditation Authority).
On this issue, the Supreme Court of Appeal in Spring Forest Trading 599 CC v Wilberry (Pty) Ltd confirmed the relevant provisions of the ECTA. It states that where a signature of a person is required by law and such law does not specify the type of signature to be used, only an advanced electronic signature will be valid. However, where parties in commercial contracts transact electronically, they may determine the formalities amongst themselves and an electronic signature will suffice, provided it identifies the person, indicates the person’s approval of information communicated, and is reliable and appropriate considering the circumstances.
That said, the ECTA lists certain documents and contracts that cannot be signed by either type of electronic signature, notably the alienation of immovable property in terms of the Alienation of Land Act 68 of 1981 (ALA), and wills or codicils in terms of the Wills Act 7 of 1953.
Although the Spring Forest matter dealt with the cancellation of a commercial agreement through a succession of emails, it also established a precedent for the interpretation of immovable property agreements. In terms of the ALA, the sale of land shall only be valid if the sale is contained in a written agreement and signed by the parties to the agreement. Note that the ALA does not specify the type of signature to be used.
This, amongst other reasons, encouraged a lone, brave judge in the Eastern Cape Local Division of the High Court, Gqeberha, to pragmatically conclude that a scanned version of a party’s signature attached to a sale agreement was valid.
In this matter, Borcherds and another v Duxbury and others, the court held that the signature did not qualify as data or a signature generated electronically, and it could be compared to a “handwritten” signature. Respectfully, this robust approach should be welcomed in an electronic age.
Unfortunately, the court did not conclusively link the validity of electronic signatures in the ECTA with the provisions of the formality of a signature in terms of the ALA, still leaving scope for interpretation on this issue. In legal speak, this means uncertainty.
As always, all is well until someone starts looking for a way out of the contract. Our courts will no doubt sometime in the future conclusively deal with the electronic signature of property sale agreements.
Until then, we advise clients to contract with the minimum of risk to the validity of their agreements.
If you need guidance on any aspect of a sale agreement, contact Jaco Lötter for a free consultation. Talk to us, we speak property, fluently.
Tonkin Clacey Inc. Mossel Bay
044 220 0240
083 600 4903
jaco@tcinc.co.za
www.tcinc.co.za
Office 4, Nautilus Place
27 Marsh Street,
Mossel Bay
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