Using Electronic Signatures – Are They Binding?

The Electronic Communications and Transactions Act 25 of 2002 (“the Act”) regulates the use of electronic signatures within the Republic of South Africa.

Written By of Cowan-Harper-Madikizela Attorneys

Section 13 of the Act provides for the use of electronic signatures and advanced electronic signatures and a signature by reference (such as a generic email signature line that does not include an actual electronic signature).

An electronic signature is data attached to, incorporated in, or logically associated with, other data, and which is intended by the user to serve as a signature. This could constitute anything from a traditional signature on a document scanned in for onward transmission, standard usage electronic signatures, to clicking on an “I accept” option on a website.

An advanced electronic signature is a signature accredited by the South African Accreditation Authority. The accreditation process is supposed to guarantee the authenticity of the electronic signature.

Electronic signatures can be used in all transactions and documents except in:-

  1. executing wills or codicils;
  2. contracts relating to the alienation of immovable property;
  3. bills of exchange; and
  4. long-term lease agreements for immovable property, which are for more than ten years.

The use of electronic signatures in contracts is binding. There is no requirement to use an advanced electronic signature in a contract save where the parties have specifically agreed that these must be used as part of the signature formalities of the contract or where legislation prescribes it.

In more technical terms, an electronic signature will be valid and binding when a method is used to identify the person and to indicate the person's approval of the information communicated; and having regard to all the relevant circumstances at the time the method was used, the method was reliable and appropriate for the purpose for which the information was communicated.

Why would a contracting party be insistent that an advanced electronic signature be used by the parties as part of the signature formalities of the contract? We would suggest that it will be for a perceived reduction in risk in that the purpose of requiring accreditation is to guarantee the authenticity of the signature. Likewise, if there is a dispute as to the authenticity of the signature, it is assumed to be a valid electronic signature that has been applied properly, unless the contrary is proven. It shifts the onus on establishing the authenticity of an electronic signature to the signor, and away from the signee.

In what might be the first case dealing with the application of Section 13 of the Act, the High Court in FirstRand Bank Limited t/a Wesbank v Govendor [2023] ZAGPJHC 610 (unreported), was called upon to determine whether the parties concluded a valid electronic contract under the Act. To do so, the Court had to consider the electronic contract requirements set out in the Act.

In this case, Govender failed to honour a credit agreement, signed electronically, with FirstRand Bank Ltd (trading as Wesbank). Wesbank sued Govender for breaching the credit agreement and sought to repossess the vehicle and damages. Govender argued that the credit agreement, purported to be signed electronically, was not legally binding as he did not electronically sign the credit agreement but that his electronic signature was fraudulently used by his employer and brother-in-law, Mr Azar, who used it to purchase the car through a loan from Wesbank. Govender alleged that he only discovered the existence of the contract when he noticed unauthorised debits from his bank account. Govender argued that since he and Mr Azar shared a company phone, Mr Azar could have accessed the One Time Pin (OTP) and electronically signed the contract.

In this instance the onus to prove that the electronic signature on the credit agreement was that of Govender and affixed by him, or under his authority, lay with Wesbank. Wesbank claimed that the credit agreement was signed electronically in line with the Act’s requirements and in support of this claim presented witnesses and evidence, including a recorded telephone conversation between Govender and Wesbank’s call centre.

The court accepted Wesbank's version in proving on a balance of probabilities that the signature was that of Govender and authorized by him to be append electronically to the credit agreement.

The court went further and found that through his conduct, Govender accepted the terms of the credit agreement by taking possession of the motor vehicle, allowing his bank account to be debited each month with the repayment amount as contained in the credit agreement and in all material terms adhering to the terms of the credit agreement until the subsequent default.

It is our view that given the factual matrix in this case, and even if Wesbank could not prove on a balance of probabilities that it was Govender’s electronic signature to the credit agreement, Govender through his conduct should be estopped from relying on the assertion that he did not append the electronic signature and must be held liable to the terms of the credit agreement.

We are truly in the age of technology, which will also influence our existing legal framework.

We suggest that proper legal advice is obtained from experts before engaging in these, sometimes, uncharted ventures.

Henry Korsten

Henry Korsten
Head of Property, Conveyancing and Litigation

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