Page 39 - Q&A

Electronic signatures – valid or fantasy?

May 2020
“In my business I have a lot of business contracts that need regular updating
and amendments. Under the lockdown, things have been quiet, but now that
my clients are re-opening their businesses the request for new contracts and
updates are flowing in again. Many of my clients are still not prepared to meet
personally to sign or are in other provinces which makes physical signing
difficult. I can courier the contracts, but it gets cumbersome and expensive and
I’m looking into electronic signing but am unsure as to how valid a contract Commercial
signed electronically is?”

The Covid-19 pandemic has highlighted the growing demand for e-commerce
and accompanying electronic solutions to doing business. Entering, amending
and changing contracts are a vital part of any economy and traditional
approaches to contracting does not align well with a more electronic orientated
business environment where people want to work and do business from
anywhere, anytime and on any device. Hampering this by limiting contractual
arrangements to physical interactions makes no sense and the law needs to
follow suit to enable contracting to also be more ‘mobile’. But has it?
A common misconception regarding contracts is that they must be in writing
to be binding and valid. Our law does not generally require special formalities
for concluding enforceable contracts and a contract does not need to be
in writing and signed by the parties to be legally valid. There are exceptions
which may require formalities for certain types of contracts such as, for example,
suretyship agreements, leases with a duration of more than 10 years, sale of
immovable property etc.
On the other hand, verbal contracts are simple and convenient, especially
when parties cannot meet face to face. But verbal contracts are difficult and
complicated to enforce in the event of a dispute as there is generally no clear
record of the agreement details. One way to overcome this is to have a recording
of the verbal agreement, but again it must be clear who the parties are and
the recording will need to be carefully stored for use in the event of a dispute.

So, is just writing down the terms of an agreement sufficient, or must it be signed?
Again, if not signed, it becomes difficult to prove that an agreement or the terms
were intended between the parties. As such, an unsigned agreement has little
purpose as the act of signing the final version of a contract creates certainty
as to the provisions the parties agree to be bound to. So, if signing is a good
thing, do I need the original signed version of the contract for it to be valid?

There is still a general misconception that only an original handwritten
signature on an original document is valid. This is not the case. Copies of
electronic contracts, faxed and e-mailed versions of contracts, as well as

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