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The advent and advancement of technology, in particular: The digitalisation of commerce and normal working methods, have created a new era of the ‘digital age’ in human history. Digitalisation has taken over many economic activities and industries and is slowly finding its way into the legal system. Internationally, many businesses are using technology to automate their processes and practices, making it much easier, quicker and cheaper to finalise their products and services. From a legal perspective, several businesses are now concluding commercial transactions and contracts electronically. These new innovations have brought into question the legal validity of these transactions, particularly in relation to the electronic signing of documents.
The outbreak of the COVID-19 pandemic prompted many international and local companies to consider new ways of conducting business without compromising the legality and compliance aspect of operations. Electronic signatures have consequently become an essential tool for concluding legal agreements and conducting daily business practices. The move to digital signing has thus become more prevalent across all business sectors and naturally this has given rise to questions on the legitimacy of electronic signatures. It has accordingly become necessary for us to consider the legal validity and enforceability of e-signatures.
The e-signature
‘According to the South African common law, for a signature to be valid –
(1) the name or mark of the person signing must appear on the document,
(2) the person signing must have applied it themselves, and
(3) the person signing must have intended to sign the document’ (Ya-fan Wong ‘Understanding Electronic Signatures in South Africa’ (https://dommisseattorneys.co.za, accessed 21-7-2021)).
It naturally follows that if an electronic signature complies with the above requirements, it should be deemed valid in law. Section 1 of the Electronic Communications and Transactions Act 25 of 2002 (the ECTA) defines an ‘electronic signature’ as ‘data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature’. According to Anele Nongogo: ‘Data is defined broadly by the ECTA to include electronic representations of information in any form’ (‘Electronic signatures in commercial contracts’ (www.withoutprejudice.co.za, accessed 21-7-2021)). Wong (op cit) states ‘[f]rom this definition [of signature], it can be seen that for a signature to be recognised as a valid electronic signature, the signature must comply with the criteria of “intention” and “relationship” – there must be a relationship between the document and the signature and the person must have intended it to be their signature. … In many instances, an electronic signature is capable of fulfilling these requirements perhaps better than paper-based solutions, as the electronic signature process creates an electronic audit trail that clearly identifies the imprinter and recognises any tampering with the signature’.
South African law provides for two categories of electronic signatures in the ECTA, namely, ‘standard electronic signature’ and ‘advanced electronic signature’. Standard electronic signatures can be applied to documents that do not require special legal requirements. Standard electronic signatures include digital or scanned signatures. ‘An example would be using an [electronic notepad, iPad or smartphone] to sign a document or merely printing, signing and scanning the document’ (Costa Athienides ‘Electronic signing of documentation’ (www.linkedin.com, accessed 21-7-2021)). Wong (op cit) states: ‘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, the ECTA provides that the electronic signature will be deemed to be valid where:
‘(a) a method is used to identify the [sender] and to indicate the [sender’s] approval of the information communicated; and
(b) having regard to all the relevant circumstances at the time … the method was as reliable as was appropriate for the purposes for which the information was communication’ (see also Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and Another 2015 (2) SA 118 (SCA)).
‘According to the ECTA, there are some instances where an electronic signature other than a standard electronic signature may be required and include circumstances where the law requires that an agreement or document must be in writing and signed. In such instances, the document can only be signed with an advanced electronic signature as defined by ECTA’ (Wong (op cit)). Advanced electronic signatures are required for documents that require special legal formalities. An advanced electronic signature is defined as an electronic signature, which results from a process, which has been accredited by the South African Accreditation Authority. In practical terms, an advanced electronic signature is a digital signature that has been verified by a digital certificate from an accredited authority in terms of s 37 of the ECTA. To date there are only two accredited providers, the South African Post Office and LAWtrust. This is problematic given the lack of efficiency and poor service from the Post Office.
Advanced electronic signatures make use of a public key infrastructure, which uses two keys and an authorised cryptography provider to verify the authenticity of the signature. A digital certificate confirms that the security, integrity and identity of the signatory are upheld. This will usually also involve face to face verification mechanism, which may also authenticate, inter alia, the biometrics, such as the fingerprints or iris scan of the signatory; and/or a pin or password belonging to the signatory. I submit that thumbprint verification can be usually used in addition to an e-signature to authenticate the identity of an individual as most electronic devices such as cell phones and notepads already have such scanning ability.
In order to be valid, an advanced electronic signature, must meet the following requirements –
‘In South Africa, an advanced electronic signature is currently required for: (1) a suretyship agreement and (2) the signing as a Commissioner of Oaths’ (Wong (op cit)). Accordingly, I submit that an advanced electronic signature may also be used for the signing of a court affidavit and other legal documents such as loan agreements. The challenge with affidavits, however, is the requirement of commissioning in the presence of a Commissioner. Sections 1, 2 and 3 of the Regulations to the Justices of the Peace and Commissioners of Oaths Act 16 of 1963 provide that the deponent shall sign the declaration in the presence of the commissioner of oaths. I submit that this requirement can potentially be fulfilled electronically with the use of a video conferencing system such as Skype, Microsoft Teams or Zoom. It will be interesting to see if courts will allow for the e-signing and e-commissioning of court affidavits and the processes that will need to be satisfied.
Legal recognition of the e-signature
‘The use of electronic signatures has never been more relevant than at this stage in our technological development’ (David Warmback and Suhail Ebrahim ‘Electronic Signatures, Credit Agreements and the National Credit Act’ (www.wylie.co.za, accessed 21-7-2021)). As a result of recent technological advancements, many countries have been prompted to create or develop their e-commerce laws and build new legal frameworks for this emerging digital sector. In SA, the ECTA is the primary legislation that governs digital communications. The main objectives of the Act are to promote, facilitate and regulate electronic communications and transactions. The ECTA also seeks to develop a national e-strategy, promote universal access to electronic communications and transactions and prevent the abuse of information systems. In essence, the ECTA aims to address the world of e-commerce and establish legal principles to govern digitally concluded contracts and transactions.
There are several sections in the ECTA that confirms the validity of the electronic signature. Section 13(2) of the ECTA specifically confirms that contracts cannot be denied enforceability merely because they are concluded electronically or through data messages. Section 13(4) further provides that where an electronic signature has been used, such signature is regarded as being a valid electronic signature and to have been applied properly, unless the contrary is proved. The ECTA specifically states that an electronic signature is not without legal force and effect merely because it is in electronic form, clearly indicating that electronic signatures are legally recognised in SA (see s 11(1) of the ECTA and FirstRand Bank Ltd t/a Wesbank v Molamuagae (GP) (unreported case no 24558/2016, 26-2-2018) (Senyatsi AJ)). Section 15(4) of the ECTA further provides that a data message, such as an electronic signature, produced in any legal proceedings is admissible evidence and is rebuttable proof of the facts therein.
‘South Africa followed a global trend in recognising the legality of electronic signatures, rendering the status of electronic signatures as a functional equivalent to traditional “wet” [ink pen-based] signatures’ (Wong (op cit)). The ECTA, like most electronic legislation in foreign countries, have followed the recommendations of the United Nations Model Law and European Union directives by providing legal recognition to electronic signatures and transactions (see the United States Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act, and the Canadian Uniform Electronic Commerce Act 1999, and the United Kingdom Electronic Communications Act 2000).
Importantly, the ECTA does not limit the operation of any law, nor does it compel anyone to use or submit information in an electronic form. Gereda comments that the Act does not discriminate between paper and electronic documents, nor does it create a new way of doing business (see Shumani L Gereda ‘The Electronic Communications and Transactions Act’ in Telecommunications Law in South Africa (Johannesburg: STE Publishers 2006)). The ECTA facilitates and gives legal recognition to the new ways of doing business that are emerging through the evolution of technology. In a country like SA, which has components of a developing and developed society, the emergence of digitalised economy could prove challenging to the public and private sector. Given this unique position, the ECTA has done well to facilitate the use of electronic communications.
Conclusion
In today’s modern society, it is difficult to imagine the world without technology. The Internet, social media, Zoom, on-line shopping and e-mails have become a part of everyday life. Technology has created, and continues to create a new economic landscape, which has revolutionised the global economy and fundamentally changed the way we communicate. The world has embraced the rapid pace in which technology has infused into human living, and it is interesting to note that mediums such as the World Wide Web, and Google were established less than 30 years ago. The digital revolution has occurred so rapidly that its character and implications from a commercial and legal perspective have not yet been fully understood. The age of digitalisation has changed the way we interact with one another, and from a legal perspective it has changed the way contracts and other legal and commercial transactions are concluded.
Dr Ciresh Singh LLB LLM PhD (Law) (UKZN) is a legal practitioner in Durban.
This article was first published in De Rebus in 2021 (Aug) DR 20.
