blog

July 17, 2019

Contracting in the digital age

The use of modern communication in the form of email, SMS and instant messaging is becoming an increasingly common way of doing business, with legally binding agreements being concluded every day through electronic means.

Online stores such as ‘Amazon’ and ‘eBay’ have dominated the world of online shopping. Paperless transactions are permeating every sphere of life, and with the increasing use of the internet and the exchange of information using electronic means, the need for paper based, physically signed contracts, unless specifically required by law, is slowly becoming superfluous.

It has been nearly 17 years since the Electronic Communications and Transaction Act, 2002 (“ECTA”) was passed in South Africa. Given the thousands of electronic transactions concluded on a daily basis, there have been a surprisingly small number of ECTA related disputes which have required adjudication by our Court. The power of an electronic communication and how it can legally bind someone to a transaction is now revisited with reference to two key court decisions.

In terms of the ECTA, virtually any method of electronic communication including, but not limited to, SMSs and emails can also be used as a method of concluding an agreement. In Jafta v Ezemvelo KZN Wildlife, KZN Wildlife interviewed Jafta for employment, and, when he was offered employment a few days after the interview, he could not respond to the offer due to his laptop malfunctioning. The Human Resources Department at KZN Wildlife contacted him via SMS a few days later asking him if he accepted the offer. He replied via SMS that he accepted the offer. KZN Wildlife disputed that it had received his SMS and employed someone else. Amongst many other issues before the Court was whether an SMS was a proper method of communicating an acceptance of the offer. The court recognised the SMS sent by Jafta as a valid acceptance of KZN Wildlife’s offer.

In terms of the ECTA, there are other electronic methods of contracting such as using electronic signatures or advanced electronic signatures to sign documents and/or contracts. In certain cases, parties do not need to physically sign a contract, but can use an advanced electronic signature or an electronic signature. It is important to note that section 13 of the ECTA provides that where the law requires a contract to be signed in order to give it legal validity, only an advanced electronic signature may be used.

In Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash, the issue before the Supreme Court of Appeal was whether an email communication satisfied a cancellation clause in a paper-based contract where the contract stated that any cancellation must be “in writing” and “signed” by both parties. The court held that emails are also considered to be in ‘writing’ as envisaged in the ECTA. The court went on to add that ‘the parties did not specify the type of electronic signature that was required, the typewritten names of the parties at the foot of the emails (which were used to identify the users) constitute ‘data’ that is logically associated with the data in the body of the emails, as envisaged in the definition of an ‘electronic signature.” They therefore satisfy the requirement of an electronic signature and had the effect of authenticating the information contained in the emails.

Thus, non-variation clauses, which stipulate that ‘no alteration, variation or cancellation of this agreement will therefore not be of any effect, unless reduced to writing and signed by both parties’, also include electronic communications such as SMSs and/or emails.

In light of the above, and, with the ever-increasing use of electronic communications such as email, SMS and instant  message communication, one should be acutely aware that they can be legally binding.

Mthokozisi Sithole

Candidate Attorney

(031) 536 7580

061 773 4395

msithole@livingston.co.za

The content of this document is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it

constitute legal or other professional advice. You should seek legal or other professional advice before acting or relying on any of the content.