A recent decision of the Supreme Court of Appeal (SCA) reminds us that the use of e-mails can have substantial legal consequences for businesses. "The SCA recently considered whether e-mail exchange met the standard requirements for variation clauses to contracts to be 'in writing' and to be 'signed', says Robby Coelho, partner and head of the Technology, Media & Telecommunications Sector at Webber Wentzel. “It found that emails satisfied both these requirements.”
The court made its judgment in Spring Forest Trading v Wilberry on 21 November 2014, and referred to the provisions of the Electronic Communications and Transactions Act, No. 25 of 2002 (ECTA).
The contracts in question contained a "standard" non-variation clause which provided that no variation or consensual cancellation would be effective unless reduced to writing and signed by both parties. The parties had exchanged a series of emails in terms of which they agreed to the cancellation of the contracts. The SCA found that contracts could consensually be cancelled in this way.
The SCA also found that the onerous requirements of "advanced electronic signature" imposed by the ECTA did not apply to private agreements, but only in instances where a statute or law required a signature.
Accordingly, the typewritten names of the parties at the foot of the emails, which were used to identify the parties, were sufficient to satisfy the requirements of the non-variation clause and constituted an "electronic signature" in terms of ECTA.
Coelho says, “Given the pervasive use of e-mail in the workplace and in commercial interactions, it is important to exercise caution. It is essential to bear in mind the possible legal consequences, whether intended or not, of agreeing to amendments made to contracts, or to the termination of contracts, by way of email exchanges."
"There could also be broader implications where agreements require notices or consents to be given in writing,” explains Coelho. “These principles also extend to other technology, such as correspondence which takes place by way of SMS and the like.”
He says that to avoid dispute regarding the terms of the variation or the cancellation, and the identity of the parties authorised to make such changes, contracts should expressly regulate whether electronic communications (or "data messages", as defined in ECTA) are permitted.