The Electronic Signature

A Practical Alternative to The Traditional Wet-Ink Signature

With the resurgence of the Alert level 4 Lockdown restrictions (albeit in an amended form) many South Africans have been forced back into the home office. As this marks South Africa’s third wave of the coronavirus and a third stringent lockdown period, we can’t help but rethink how we do business and adapt to the ever insistent “new normal”. The pressing need to adapt is manifest in how we sign documents, especially in the legal context.

Many documents are typed, printed and physically signed with a pen. Obtaining originals of such documents or even having to resort to printing typed documents can prove to be quite difficult or tedious, not to mention costly. With the advancement of modern technology, it is questionable if such steps are necessary. The Electronic Communications and Transactions Act 25 of 2002 (“ECTA”) offers alternatives to the traditional wet-ink/ manuscript signature, including the advanced electronic signature.

Electronic Signatures

ECTA provides for the use of an “electronic signature”, defined as:

“data attached to, incorporated in or logically associated with other data and which is intended by the user to serve as a signature”

This definition allows for an electronic signature to take a wide range of forms including:

• a signature created by the use of a stylus/ finger on a mobile phone or tablet;
• an electronic copy of a wet-ink signature on an electronic copy of a document; or even
• a typed name at the end of an email.

As per Section 13(3) of ECTA an electronic signature used in an electronic transaction will only be valid if:

• a method was used to identify the signatory and to indicate signatory’s approval of the information communicated; and
• taking into consideration the relevant circumstances at the time the method was used, the method was reliable as was appropriate for the purposes for which the information was communicated.

However, electronic signatures are not always acceptable when communications are transmitted electronically. In Global & Local Investments Advisors (Pty) Ltd v Fouche (71/2019) [2020] ZASCA 8 (18 March 2020) the Supreme Court of Appeal (“SCA”) had to consider the applicability of section 13(3) of ECTA and whether a typed name at the end of an email constituted a signature for the purpose of a mandate concluded between the Respondent and Appellant. The mandate authorised the Appellant to act as the Respondent’s agent and invest money on the Respondent’s behalf. The mandate further provided that the Respondent was authorised to send instructions to the Appellant via email, but these emails had to include the Respondent’s “signature”. The Respondent’s email account was hacked by fraudsters who sent emails to the Appellant instructing it to send funds to third party bank accounts. The Respondent’s typed name appeared at the end of those emails. The Appellant acted upon the instructions of those emails and transferred the funds causing the Appellant to lose large sums of money. In the Gauteng Division of the High Court, the Respondent successfully claimed a reimbursement of the funds transferred by the Appellant, with the Court finding that the typed name did not fulfil the mandate’s requirement of a “signature” and that the Appellant had accordingly breached the mandate. The Appellant appealed the decision to the SCA.

In determining whether the typed name constituted a signature for the purpose of the mandate, the SCA emphasised that a signature’s purpose in the everyday and commercial context is to authenticate and verify.  It held that, for the purpose of authentication and verification, a signature in the ordinary course, specifically in “manuscript form”, even if scanned and sent electronically, was what was required in this context. It further held that, for section 13(3) of ECTA to be applicable, it would have to be shown that an electronic signature was required in terms of the mandate, and that such reference to the word “electronic” was noticeably missing from the mandate. The appeal was accordingly dismissed with costs.

Advanced Electronic Signatures

Electronic signatures are not sufficient when legislation requires a document to be signed in order to be valid. Per section 13(1) of ECTA, when a person’s signature is specifically required by law, and such law does not indicate the type of signature required, that requirement is only met in relation to a data message if an advanced electronic signature (“AES”) is used.  Examples of documents wherein an AES could be used as an alternative to a wet ink signature include:

• A suretyship (Section 6, General Law Amendment Act, 1956);
• A company’s Memorandum of Incorporation (Section 13, Companies Act, 2008); and
• A summons (an AES is specifically included in the definition of “signature” in the Magistrates’ Court Rules).

ECTA defines an AES as “an electronic signature which results from a process which has been accredited by the [South African Accreditation] Authority”. An AES incorporates the use of Public Key Infrastructure to ensure a signature is secure and to provide a level of authentication to the signatories.

Per section 38(1) of ECTA, an AES must fulfil the following criteria:

• it must be uniquely linked to the user;
• it must be capable of identifying that user;
• it will be created using means that can be maintained under the sole control of that user;
• it must be linked to the data or data message to which it relates in such a manner that any subsequent change of the data or data message is detectable;
• it is based on the face-to-face identification of the user.

For an AES to obtain the necessary accreditation, an application must be made to the South African Accreditation Authority. Currently, only the South African Post Office and the Law Trusted Third Party Services (Pty) Ltd have been accredited to provide advanced electronic signatures.  To obtain an AES, you need to approach these accredited bodies who can grant you access to their platforms supporting an AES. Be advised that this comes at a cost, a fee is typically charged for both enrolling a person on the platform (part of verifying the signature) and for yearly subscription to the platform on which the AES can be used.

Exclusions

In terms of ECTA, some documents cannot be concluded or signed with the use of an electronic signature or even an AES. Only traditional wet ink signatures will suffice. These agreements include:

• an agreement for alienation of immovable property;
• an agreement for the long-term lease of immovable property (in excess of 20 years);
• a will or codicil; and
• a bill of exchange

Conclusion

In summation, in some instances an electronic signature or an AES can be used as an alternative to a manuscript signature. ECTA allows parties to make use of electronic signatures when concluding online transactions. For those signatures to regarded as valid, it is advisable for parties to agree to the use of electronic signatures in such transactions and for those electronic signatures to fit the requirements as set out in section 13(3) of ECTA. When a signature is required by law an AES must be used. Notwithstanding this, the traditional wet ink signature is still required for the signing of certain documents as specified in ECTA.

Contact us today for more information on the electronic signature and its proper legal use.