ELECTRONIC SIGNATURES: TIME TO THINK DIFFERENTLY AND CHANGE YOUR APPROACH

I think we can all agree that the current global pandemic is forcing us all to re-assess various aspects of our lives, including how you run your business.

Technology has evolved so much over the last few decades and we are now entrenched in the fourth industrial revolution, but have we utilised these developments to their maximum potential?  I am sure most of us have used electronic signatures before, but do we understand their value and appreciate what the legal implications are?

Contracts in South African law

Not all contracts need to be reduced to writing, except for those required by law (for example sales of immovable property).  In the past, variation and or cancellation of an agreement was, generally, only accepted by physically recording the agreement in writing and, it being signed by both parties.  In fact, you still find, most agreements still contain a variation and cancellation clause confirming that for it to be taken into effect it must be concluded in writing.

The function of a signature

The function of a signature is to provide evidence as to the identity of the signatory, as well as to confirm their acceptance and/or consent to the terms of the agreement signed. The most common forms of a “signature” are any of the following:

Signature by ink, with a writing instrument;

Electronic signature; and

Advanced electronic signatures.

So, what is an electronic signature?

Simply put, an electronic signature is a legally recognised form of conveying a signatory’s consent to agree to the contents of a document.  In South Africa an electronic signature is regulated by the Electronic Communications and Transactions Act 25 of 2002 (ECTA).  The ECTA provides for two types of electronic signatures: electronic and advanced electronic signatures.

Electronic Signature:

This form of signature includes any digital or scanned signatures and are often referred to as non-secure signatures. A standard electronic signature suffices where a signature is required by the parties to an agreement and they do not specify the type of electronic signature to be used.  In this instance, ECTA provides that the electronic signature will be deemed to be valid where:

A method is used to identify the sender and to indicate the sender’s approval of the information communicated; and

Having regard to all the relevant circumstances at the time, that the method was reliable and appropriate for the purposes for which the communication was intended.

For most purposes, standard electronic signatures will suffice when signing a document electronically.

Advanced Electronic Signature:

An advance Electronic signature is a specialised type of signature. The products and services used to create the advance electronic signature must be accredited by the South African Accreditation Authority (SAAA”).

It is this accreditation by the SAAA which differentiates an electronic signature from an advanced electronic signature.

Exceptions

The ECTA excludes the following transactions from being concluded electronically, whether or not an electronic signature or an advanced electronic signature is used by the parties to sign:

Agreements for the sale of immovable property;

Long-term leases of land exceeding 20 years;

Signing of a will; and

Bills of exchange.

Electronic signature and lockdown

Signatures are commonplace in the legal field and most daily business transactions. It becomes challenging when multiple signatures are required in respect of the same document (for example a resolution for a board of directors) but all of the parties are not in the same place (i.e. current lockdown situation in South Africa).

The reality is that our “volatile economy needs to keep going.  While we have fears about our health, we cannot ignore our financial and economic well-being.

In South Africa the light at the end of the tunnel, or at least a glimmer of light can be found in the ECTA and it would be prudent of businesses to advocate for electronic signatures in transactions during the current lockdown in an effort to maintain and sustain normal business and economic activity.

 

Article Credit: BLC Director Sonja Tifloen

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