Article, Electronic Signatures and Covid- 19, a perspective.

By S Mnisi 010 592 2321
 
With the global outbreak of the coronavirus pandemic South Africans are urged to practise social distancing to curb the spread of this virus by staying indoors for the foreseeable future 1.
 
As a result, it has been impossible to attain “multiple original handwritten signatures on the same document.” 2
 
The nationwide lockdown has highlighted the need of businesses to use electronic signatures as a means of continuing to do business in order to keep the economy going. 3
 
The Electronic Communications and Transactions Act 25 2002 (ECTA) is put in place to as a solution to this obstacle. 4
 
The Act makes provision for two forms of electronic signatures namely, electronic signatures and advanced electronic signatures. 5
 
What is an electronic signature?
 
Section 1 of the Electronic Communications and Transactions (ECT) Act of 2002, defines an electronic signature as any data attached to or logically associated with other data, which is intended to be a signature and has a relationship with the that data. 6
 
This relationship can be any number of things, including a data signature residing in the same file, or data residing in a different file to which the original document points. 7
 
Law regulating electronic signatures:
 
Legislation such as the South African Common Law and The Electronic Communications and Transactions Act, as well as legislation relevant to specific transaction types regulate electronic signatures for any given transaction.

“South African Common Law has in the past made allowances for a variety of different formats to be recognised as ‘signatures’, including X’s, thumbprints and other markings that explicitly demonstrate intent and consent. Common Law implies that a document must have the name or mark of the person signing, the person signing must have applied it themselves, and the person signing must have intended to sign the document. This paves the way for electronic signatures to be recognised as legally binding and enforceable.” 8

The ECT Act specifically makes allowances for the legality of electronic signatures. Most of the documents signed do not legally require a signature, it more of a process requirement in verifying who the parties are. 9
 
Consequently, an electronic signature fulfils this requirement possibly better than paper-based solution, because the electronic signature forms a “tamper-evident audit trail that clearly identifies any areas of risk or suspicion.” 10
 
In respect of suretyships and other transactions, an advanced electronic signature is required in order for it to be legal and enforceable. If these documents are signed electronically, the use of a specific certification authority recognised by the South African Department of Communications and other authentication methods. 11
 
Section 11 of the ECTA makes provision for the legal recognition of data messages and states that, “information is not without legal force and effect merely on the grounds that it is wholly or partly in the form of a data message”. 12
 
Section 12 of ECTA further provides that, “where it required that a document must be in writing that requirement is met if the document is in form of a data message, and accessible in a manner usable for subsequent reference.” 13
 
According to the Act, it is clear that a document in an electronic format has legal force and may be binding.
 
For a signature to be valid in terms of South African law, three requirements must be met: 14
 
a) The name or mark of the person signing must appear on the document.
 
b) The person signing must have signed it.
 
c) The person signing must have intended to sign the document.
 
According to Section 13 of ECTA an electronic signature is not without legal force and effect simply on the grounds that it is in electronic form.15
Where an electronic signature is required by the parties to an electronic transaction and the parties have not agreed on the type of electronic signature to be used, that requirement is met in relation to a data message if: 16
 
(a) a method is used to identify the person and to indicate the person’s approval of the information communicated.
 
(b) having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.
 
Fundamentally, an electronic signature must show that there is a relationship between the sender’s identity and a person’s intent to sign the document in order for the signature to be considered valid.
 
The Supreme Court of Appeal in Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash and Another (725/13) [2014] ZASCA 178; 2015 (2) SA 118 (SCA) (21 November 2014), considered the question as to whether the name of a person at the end of an email can constitute an electronic signature for the purposes of ECTA. 17

The court held that “as so long as the data in an email is intended by the user to serve as a signature and is logically connected with other data in the email the requirement for an electronic signature is satisfied”.18

In the event that the signature of a person is required in terms of law and such law does not specify the type of signature, an advanced electronic signature must be used for that requirement to be met. 19
 
In terms of section 37 of the ECTA, an advanced electronic signature is defined as “an electronic signature which results from a process which has been accredited by the Authority.” 20
 
Electronic signatures
 
Electronic signatures may be used for most transactions unless: 21
 
a) The law specifically states that they may not be used.
 
b) The parties to a transaction agree that they may not be used.
 
One can take several steps to ensure the method of electronic signature in use is reliable and appropriate, including: 22
 
a) “Using a dedicated organisation domain name that clearly identifies the company to which the signatory belongs.
 
b) Having the signatory send the signed document directly to the recipient, minimising the use of intermediaries.
 
c) Ensuring strict compliance with signature formalities that may be specified in the relevant agreement.
 
d) Utilising a service provider in order to authenticate the identity of the signatory as well as the time and date of signature.
 
e) Advanced electronic signatures are mandatory where the signature of a person is required by law. The South African Accreditation Authority must accredit the products and services used to create the advanced electronic signature.
 
f) Public bodies in South Africa can also issue and file documents in electronic form. While physical access to our courts is currently restricted, new proceedings may be instituted electronically.”
 
There are several transactions which are expressly excluded from application of the Act namely, agreements for the sale of immovable property, long-term leases of immovable property in excess of 20 years, wills and bills of exchange. 23
 
There are limitations to e-signings that parties must consider before proposing or agreeing to use e-signing in their transaction, these include: 24
 
a) “In a cross-border transaction, electronic signatures may not be recognised or supported in law in each of the relevant jurisdictions to your transaction. This includes the jurisdictions of each of the signatories as well as the jurisdictions where the agreement may be enforced. For this reason, the validity of e-signing under each jurisdiction relevant for your transaction must be confirmed with local counsel early in your transaction.
 
b) Greater evidential risk attaches to the use of electronic signatures on account of the fact that the handwriting of the signatory cannot be examined to determine its authenticity. This risk may be mitigated by using a stylus pen or a web-based e-signing platform that offers enhanced security and authentication features such as SMS authentication and audit trails that improve the security of the document and the evidential weight of the signature.
 
c) Where a witness is required for the valid execution of an agreement, parties could consider executing their agreement via video call to mitigate the risk of the witness not being in the physical presence of the signatory at the time of signing.
 
d) Any corporate restriction or restrictive internal information security policies of a party may limit or exclude its use of electronic signatures or virtual signing. A thorough due diligence should flush out any such restriction and enable parties to fully consider their options.
 
e) While not unique to e-signings, there is arguably more scope within certain of the e-signing options for a person to append a signature of a signatory without authority or even fraudulently.”
 
The nationwide lockdown has brought many challenges and unusual conditions for businesses, such as acquiring signatures from clients. 25
Even though South Africa is faced with the Covid-19 pandemic and living through unclear times, businesses are able to continue notwithstanding the uncertainty. Electronic signatures are one of the means that make it possible for businesses to continue in order to keep the economy going as they offer an advanced solution to these challenges. 26

Footnotes:

1.Writer S “Coronavirus: Digital Signatures are Legal and Valid in South Africa “2020 2. Blom K, Collett C and Ismail F “Electronic signatures in lockdown times” 2020 3. Simeonides A “Coronavirus lockdown shows how South Africa’s laws around E-Signatures on last wills and testaments are out-of-date” 2020 4. Writer S “Coronavirus: Digital Signatures are Legal and Valid in South Africa “2020 5. Electronic Communications and Transactions Act of 2002. 6. Section 1 of the Electronic Communications and Transactions Act of 2002. 7. HR PULSE “Understanding the legal side of electronic signatures in South Africa” 2015 8. HR PULSE “Understanding the legal side of electronic signatures in South Africa” 2015 9. HR PULSE “Understanding the legal side of electronic signatures in South Africa” 2015 10. HR PULSE “Understanding the legal side of electronic signatures in South Africa” 2015 11. HR PULSE “Understanding the legal side of electronic signatures in South Africa” 2015 12. Section 11 of the Electronic Communications and Transactions Act of 2002. 13. Section 12 of the Electronic Communications and Transactions Act of 2002. 14. Boda R and Botes L “South Africa: Coronavirus electronic signatures and electronic meetings” 2020 15. Section 13 of the Electronic Communications and Transactions Act of 2002. 16. Section 13(3) of the Electronic Communications and Transactions Act of 2002. 17. Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash and Another (725/13) [2014] ZASCA 178; 2015 (2) SA 118 (SCA) (21 November 2014). 18. Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash and Another (725/13) [2014] ZASCA 178; 2015 (2) SA 118 (SCA) (21 November 2014). 19. Boda R and Botes L “South Africa: Coronavirus electronic signatures and electronic meetings” 202021. Section 37 of the Electronic Communications and Transactions Act of Grealy P and Mngomezulu N “COVID-19: Electronic signatures in lockdown times” 2020 22. Blom K, Collett C and Ismail F “Electronic signatures in lockdown times” 2020 23. Boda R and Botes L “South Africa: Coronavirus electronic signatures and electronic meetings” 2020 24. https://www.allenovery.com/en-gb/global/news-and-insights.25. Simeonides A “Covid-19 lockdown shows that SA’s laws around eSignatures on last wills and testaments are outdated” 2020 26. Blom K, Collett C and Ismail F “Electronic signatures in lockdown times” 2020

Disclaimer: this article does not constitute, nor should be construed as, the giving of legal advice and it is recommended that you contact one of our attorneys to obtain separate and proper advice 010 592 2321

 

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