Signing agreements and documents electronically
MAIN IMAGE: Maryna Botha, director STBB.
The lockdown order issued by President Cyril Ramaphosa in the middle of March this year has necessitated a lot of re-thinking and finding ways of doing things differently, for private persons as much as for businesses, no matter their size.
One realisation is that a tremendous bulk of daily transactions are based on the strength of individuals appending their hand-written signatures to forms and agreements, thereby signifying acceptance of rights and obligations of various sorts. A person’s signature safeguards authenticity of the transaction agreed upon and, in the event of a dispute, will constitute solid proof of the agreement, acceptable in a court.
But we are no longer in a pen-and-ink era and so much daily transacting takes place via email communication. How then can one achieve the same level of authenticity and proof of agreement if one wishes to conclude an agreement that requires a signature, without doing so in pen and ink?
In terms of South African legislation (Electronic Communications and Transactions Act, “ECTA”) there are two ways, as follows:
- For most agreements requiring “signature”, this will be constituted and complied with if there is a “digital signature”, achieved in any of these ways:
- Where you draw your signature using your finger or a stylus on devices that allows for this. If you have access to a touchscreen, you can use your finger to create an electronic signature directly in your document. This is particularly helpful when you are signing on a mobile device or tablet.
- Upload an image of your signature. Use your phone or camera to take a picture of your paper signature. Once it’s uploaded, it can be converted to a .png file that overlays over the signature line in your document.
- Use your cursor to draw your signature. Using your mouse or your touchpad, you can drag your cursor along the signature line to create a unique electronic signature.
- Use your keyboard to type in your signature. This is the easiest way to create your electronic signature. Once you’ve typed in your name, you can select a font that best matches your paper signature.
Where an agreement stipulates that parties must append their signatures thereto to show agreement – and no further requirements regarding the signature is stated – a handwritten signature or any of the above ways of signing, will suffice.
- Where it is required by law that a document must be signed by a party, an Advanced Electronic Signature (‘AES’) is required. This is defined in ECTA as “an electronic signature which results from a process which has been accredited by the Authority as provided for” in terms of the ECTA. The authority referred to is the Department of Communication.
An example is a suretyship or signing as Commissioner of Oaths. (The Commissioner can sign an electronic copy of an original paper document with his or her AES and create a certified electronic copy of the original.)
ECTA excludes the following from being concluded electronically, whether or not an AES was used by the parties to sign:
- Agreements for the sale of immovable property
The Alienation of Land Act requires that agreements for the sale of land must be in writing and signed. But ECTA makes it clear that its provisions (allowing the use of data messages and electronic signatures where a law requires writing and signature) do not apply to agreements concluded in terms of the Alienation of Land Act.
This means that a buyer can complete an offer to purchase and sign it in ink, scan it via email to the agent or seller. If an agent is involved, he will then forward it to the seller. The seller must then print it, sign as required, and then scan it back to the agent and/or purchaser. A valid and binding sale agreement will then have been constituted. The usual rules regarding counter-offers will apply.
- Long-term leases of land exceeding 20 years
This is a bit of a misnomer in that long-term leases of land in our law is understood to refer to those leases described in the Formalities in Respect of Leases of Land Act, where a long-term lease is a lease of 10 years and longer. However, as ECTA currently reads, no 20 year lease of land (or longer) can validly be concluded via electronic means.
- Signature on a will:
The Wills Act requires a will to be in writing, signed and witnessed. ECTA stipulates that its provisions do not apply to the execution, retention and presentation of a will. In other words, signing a will by electronic means, even if it is an advanced electronic signature, does not constitute compliance with the Wills Act.
- Bills of exchange
The Bills of Exchange Act deals with bills of exchange, cheques and promissory notes (referred to as negotiable instruments). This Act requires that these negotiable instruments be in writing and signed, and ECTA specifically provides that it does not apply to these instruments. More about an AES ECTA requires that AESes be issued by a service provider that has been accredited by the Department of Communications.
Lease agreements are different. There is no legislative requirement that they must be in writing or signed. So here are two options:
- They can conclude, amend, vary the agreement via electronic communications with an electronic signature – as referred to under the 4 bullet points under option 1.
- IF the agreement to be signed, amended, etc specifically states that a handwritten signature is required, then an AES can be used, unless these are specifically excluded. In other words, and AES = handwritten signature requirement, unless the agreement specifically excludes any electronic signature as referred to in ECTA.
It happens often that clients will send emails to the counterparties in agreements regarding their written agreements. Any amendment or variation will be valid only if reduced to writing and signed and, in such instances, variation by email will be possible if a proper electronic signature is used. An EAS is not required, unless the agreement specifically stipulated therefore.
Should parties wish to exclude amendment by way of electronic signature, for whatever reason, they should ensure that there is a clause in the agreement to this effect. Wording such as the following can be used, adapted, as necessary: “No addition, variation, modification or consensual cancellation of this agreement shall be of any force or effect unless it is in in writing and signed by or on behalf of all of the parties: Provided that it is specifically recorded that physical writing and signature of the parties is required for these purposes and all electronic forms of signature as contemplated in section 13 of the Electronic Communications and Transactions Act 25 of 2002, are expressly excluded.
About the author: Maryna Botha is an admitted attorney, notary and conveyancer and the marketing director of national law firm, STBB Smith Tabata Buchanan Boyes. She currently specializes in all aspects of property law and conveyancing, as well consumer and credit law. She lectures widely on these topics and publishes regularly on all aspects related to property law.