E-signatures in commercial contracts in South Africa

Under common law, the essential elements of a signature include:  

• it must be the name or mark of the person signing;
• the person signing must have applied it themselves; and
• the person signing must have intended for it to authenticate them.  

In accordance with this definition, the common law may be interpreted to extend to electronic signatures. Nonetheless, the Electronic Communications and Transactions Act, 2002 (ECTA) provides for the use of either ordinary electronic signatures or advanced electronic signatures.  In this regard: an ordinary electronic signature is defined in the ECTA as data attached to, incorporated in or logically associated with other data and which is intended by the user to serve as a signature; whereas 
an advanced electronic signature is defined in the ECTA as a signature resulting from an electronic process which has been accredited by the relevant authority in South Africa. 

The ECTA provides that where a signature is required by law, and that law does not specify the type of signature, then the signature requirement is only met when an advanced signature is be used. On the other hand, an ordinary electronic signature may be used where parties to an electronic transaction permit the use of an electronic signature without specifying the type of electronic signature required. Further, the ECTA also provides that if an advanced electronic signature is not used then the software used for the ordinary electronic signature should at least be a reliable method of identifying the person and to indicate the person’s approval to the information to which it is attached.

The following agreements and or legal documents must be  in written form to be enforceable:                

• agreements for the alienation of immovable property which must be in writing and signed in terms of the Alienation of Land Act 68 of 1981;
• long-term lease agreements of immovable property longer than 10 years as provided in respect of the Leases of Land Act 18 of 1969;
• bills of exchange which must be in writing and signed in terms of the Bills of Exchange Act 34 of 1964;
• suretyship agreements and credit agreements must be in writing and signed in terms of the National Credit Act 34 of 2005; and
• contracts for executionary donations (which relate to agreements to donate at a future date) must be in writing and signed in terms of the General Law Amendment Act 50 of 1956.

As an overarching principle, the ECTA provides that where a law requires information to be retained, that requirement is met by retaining such electronic information (referred to as a data message), if: the information is accessible so as to be usable for subsequent reference; such information is in the format in which it was generated, sent or received, or in a format which can be shown to represent accurately the information generated, sent or received; and the origin and destination of that information and the date and time it was sent or received can be determined. However, the ECTA provides that the abovementioned does not extend to any information the sole purpose of which is to enable the message to be sent or received. Additionally, it should be noted that certain general laws contain specific requirements for archiving and storing electronic documents, including the following:

• Companies Act 71 of 2008;
• Financial Intelligence Centre Act 38 of 2001;
• Financial Advisory and Intermediary Services Act 37 of 2002;
• Close Corporations Act 69 of 1984;
• Income Tax Act;
• Value Added Tax Act 89 of 1991;
• Customs and Excise Act 91 of 1964;
• Stamp Duties Act 77 of 1968;
• Prescription Act 68 of 1969;
• Insolvency Act 24 of 1936;
• Promotion of Access to Information Act 2 of 2000; and
• various South African labour laws and numerous other legal requirements"

N/A

In terms of the ECTA, the use of an electronic signature is not without legal force and effect merely on the grounds that it is in electronic form. However, the provisions of the ECTA do not extend to certain agreements and/or documents, including:  agreements for the alienation of immovable property (in accordance with the Alienation Land Act 68 of 1981); long-term lease agreements of immovable property which are longer than 20 years (in accordance with Leases of Land Act 18 of 1969); and bills of exchange (in accordance with the Bill of Exchange Act 34 of 1964). It should be noted that although the ECTA makes reference to a long-term lease agreement that is longer than 20 years, in South Africa it is generally understood that a long-term lease agreement is one which is longer than 10 years as provided for in the formalities in respect of Leases of Land Act No 18 of 1969. 

• Electronic Communications and Transactions Act 25 of 2002;
• Alienation of Land Act No 68 of 1981;
• Bills of Exchange Act No 34 of 1964; 
• General Law Amendment Act 50 of 1956;
• Leases of Land Act No 18 of 1969; and 
• National Credit Act 34 of 2005.