Electronic Documents and Electronic Signatures – A Revisit in Changing Times.
We all know that verbal agreements, although fully binding for most types of transaction, are a recipe for uncertainty and dispute. It’s not just a question of trust - even if no one is deliberately dishonest about what was agreed, innocent misunderstandings are common. We have a natural tendency to hear what we want to hear and to remember what we want to remember, and a properly-drawn written agreement avoids that.
So even when a written and signed document isn’t required it is always wise to insist on one. Note that the parties themselves can require a document to be in writing and signed. Or it could be required by law – the most common examples of the latter are property sale agreements, wills, suretyship agreements, ante-nuptial contracts, and credit agreements (there are other less common examples – take professional advice in doubt).
Have you ever wondered: why do we actually sign documents, especially legal contracts and/or undertakings? Probably for certainty and the confidence of truth that may be reflected by adding our signatures to the bottom of a document. Breaking it down, this need for certainty by signature, probably relates to:
- bringing about a form of positive identification of the person or individual binding him/herself;
- symbolizing and reflecting that individual’s intent to be bound to the agreement and actions resulting therefrom;
- having the added bonus that the event / document is thus elevated in status by being “recorded”.
Firstly, when is a digital agreement “in writing”?
Our law, in the form of the Electronic Communications and Transactions Act, of 2002 (the “ECT Act”) recognises the general validity of digital documents.
Where our law requires that contracts must be in writing, the ECT Act recognises that a data message may meet the requirements for being “in writing” and that where the signature of a person is required by law and such law does not specify the type of signature, the requirement is met if an “advanced” electronic signature is used, which establishes a valid and binding agreement.
A “document or information” is “in writing” if it is thus-
- “in the form of a data message; and
- accessible in a manner usable for subsequent reference.”
Secondly, is “signature” always required?
Formal “signature” isn’t always essential as the ECT Act provides that if the parties to an electronic transaction don’t specifically require an electronic signature, “an expression of intent or other statement is not without legal force and effect merely on the grounds that -
- it is in the form of a data message; or
- it is not evidenced by an electronic signature but is evidenced by other means from which such person's intent or other statement can be inferred.”
Where a “signature” is required by law, the ECT Act recognises the concept of “electronic signatures”, which is in fact 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”.
An “electronic signature” can take many forms. Where it is required by the parties, but they haven’t agreed on a particular type of electronic signature to be used, it is valid if –
- “a method is used to identify the person and to indicate the person's approval of the information communicated; and
- 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.”
- a mere identifying name at the end of an email message,
- the more formal corporate signature, incorporating the name, designation and often business logo at the bottom of an e-mail,
- signatures affixed by virtue of signature tablets (known as Wacom signature pads) as used by banks (and gyms) throughout SA,
- scanned images of physical signatures,
- signatures created by pdf applications and
- signatures confirmed by merely checking a checkbox at the bottom of a website or page if so intended,
- as well as various others.
Exceptions to acceptability of electronic signatures:
Electronic signatures as listed above, are mostly deemed valid except in cases where either the parties themselves require actual physical signatures or where a law specifically prescribes a physical (“wet ink on paper”) signature.
Some of these exceptions to the acceptability of digital signatures are even specifically listed and provided for in the ECT Act:
- an agreement for the sale of immovable property in terms of the Alienation of Land Act of 1981 (The Alienation of Land Act requires explicitly: the content must be contained in a deed of alienation signed by all the parties thereto or by their agents acting on their written authority, and thus any contract for the sale or purchase of immovable property is specifically excluded from being valid if entered into electronically);
- an agreement for the long-term lease of immovable property in excess of 10 years as subsequently inferred to in terms of the Alienation of Land Act read together with the Deeds Registries Act of 1937 and the Formalities in respect of Leases of Land Act of 1969;
- the execution, retention and presentation of a will or codicil as defined in the Wills Act of 1953;
- the execution of a bill of exchange as defined in the Bills of Exchange Act of 1964.
This is a concept of authentication designed to make an electronic signature more reliable and it is used when a law requires signature for specified documents or transactions, but doesn’t specify a particular type of signature.
These types of signatures are “advanced” in the sense that it is to be accredited by a valid accreditation authority that presents a certificate confirming the identity of the individual so signing. Currently only two such entities, the SA Post Office as well as a private company called LAWTrust, are authorised entities to currently issue these validly in South Africa (as authorised under the requirements of the ECT Act ).
It is suggested that an “advanced” electronic signature should:
- identify the signatory;
- in itself be identified as an advanced electronic signature;
- detect any subsequent alterations or corruption of the signed data message in the document (an “audit trail”);
- make use of a 3-factor signing mechanism (or equivalent) to ensure the highest reliability of the signature.
In terms of the above, technically, signatories to affidavits and even the commissioning of documents should be legally acceptable, if done in an electronic format complying with the ECT Act.
Unfortunately, digital / electronic signatures as such have not yet been widely used, possibly due to various hurdles with a lot of governmental offices who lack understanding thereof. Another hurdle may also be the economic factor and perceived difficulty of access to the obtaining of “advanced” electronic signatures preventing widespread use thereof.
The challenge therefor remains to have these digital signatures accepted after adequate testing thereof in our courts of law.
A further caveat:
Check before merely accepting the use of electronic signatures with Governmental offices such as the Deeds Office or the Master of the High Court’s Offices:
Even though the Master of the High Court did not accept electronic signatures on documents prior to Covid-19 lockdown, it has been argued that there should be no legal impediments on why one could not submit electronically to the Master’s Offices. Submitting electronically has indeed been allowed to a certain extent during the current Lock-down conditions. Time will tell how this approach will be recognised and furthered after the lifting of lockdown.
In principle, where the Deeds Registries Act requires documents like the Power of Attorney to Transfer Property to be “signed”, that could technically be interpreted to be done either physically or electronically.
In October 2018, the first electronically signed signature of a Power of Attorney to Transfer Property was used and indeed registered in Bloemfontein. This use of an electronic signature has since been criticised widely, as it was subsequently confirmed that a binding and pre-existing Registrar’s Conference Resolution (Nr 50/2006) clearly prescribed that only originally signed documentation would be permissible for Deeds Office purposes, thus rendering future use of electronic signatures for use in Deeds Offices invalid until this Conference resolution is withdrawn or repealed.
The Electronic Deeds Registries Act (the “EDRS Act”) has however since been signed into effect on 19 September 2019, which should in due course enable property transactions to be processed electronically in its entirety. The Chief Registrar of Deeds has in effect been instructed to develop, establish and maintain such an electronic deeds registration system using information and communications technologies for the preparation, lodgement, registration, execution and storing of deeds and documents.
The purpose of the EDRS Act is intended to streamline property registrations in the Deeds Office. As such, it aims to enable electronic processing, preparation (which will effectively incorporate some form of “electronic signatures by Conveyancers”) and lodgement of deeds and documents by Conveyancers and the Registrar of Deeds.
And elsewhere?
Internationally, the approach seems to be somewhat similar to South Africa, with the ECT Act overlapping legislation in the US and European Union. There seems to be all sorts of conventions that govern these acts with reference to international e-commerce.
In conclusion:
Even when not specifically required, a big advantage of “advanced” electronic signatures is that they are presumed to be valid. That means anyone attacking one would have to prove its invalidity and not the other way round.
They are also instantaneous and quick, especially when signatories are in different venues, where limited printing and scanning facilities are available, in circumstances such as Covid-19 lockdowns. Parties to agreements can therefor sign anywhere, anytime. It can provide an enhanced customer experience, signifies technical modernity, with the added bonus that documents can be rendered tamper-proof after signing thereof.
Under certain circumstances, electronic signatures can indeed be more secure than the old pen and ink method.
Signing legal documents electronically does however seem to detract from the “personal experience” and time will tell if it also detracts from the weight of the officiator’s conscience and binding intent, when executing its physical handwritten signature to a document, as opposed to signing by means of applying a certificate in the form of an “advanced” electronic signature to a document.
Sekuriteitsoorwegings en bedrog; aan die hand van die R804 000 voorbeeld
Soos altyd is kubermisdadigers altyd gereed om toe te slaan. Daarom is al die gewone waarskuwings met betrekking tot elektroniese kommunikasie ook hier van toepassing. Boonop moet mens ook seker maak dat elektroniese dokumente nie gewysig kan word nadat dit voltooi en onderteken is nie.
’n Voorbeeld van “bedrieglike elektroniese handtekeninge” behels ‘n onlangse saak oor aanlyn bedrog (Global & Local Investments Advisors (Pty) Ltd v Fouche (71/2019) [2020] ZASCA 8). In hierdie saak is ‘n praktyk van finansiële adviseurs vir R804 000 gedagvaar, nadat hul kliënt se Gmail rekening deur bedrieërs gekraak is.
• Die bedrieërs het die belegger se daadwerklike e-posadres en besonderhede bekom. Hulle het dit gebruik om drie e-posse aan die finansiële adviseurs te stuur, met die instruksie om die totale bedrag van R804 000 na die bedrieërs se bankrekeninge oor te plaas. Twee van die e-posse het afgesluit met die woorde, ‘Groete, Nick’, en die derde een met ‘Dankie, Nick’.
• Die finansiële adviseurs het die oorplasings gemaak. Die belegger het hulle gedagvaar op grond daarvan dat die betalings teenstrydig was met die skriftelike mandaat wat hy aan hulle gegee het. Ingevolge hiervan moes ‘Alle instruksies met die kliënt se handtekening daarop per faks na [011 *** ****] of per e-pos na [***@***.co.za] gestuur word.’
• Die finansiële adviseurs het aangevoer dat hulle ingevolge die mandaat opgetree het aangesien die afsluitings ‘Groete, Nick’ en ‘Dankie, Nick’ geldige elektroniese handtekeninge kragtens die Wet op Elektroniese Kommunikasie en Transaksies was.
• Die Hoogste Hof van Appèl het egter die Hooggeregshof se bevinding dat die finansiële adviseurs aanspreeklik was, bekragtig. Hulle het nie ingevolge die mandaat opgetree nie. Die mandaat het “’n ‘handtekening’ vereis wat in beide die alledaagse en kommersiële konteks vir doeleindes van waarmerking en bevestiging gebruik word.” Die Hof het daarop gewys dat die woord ‘elektroniese’ opvallend afwesig was uit die mandaat. Die Hof het bevind dat die Hooggeregshof reg was om te beslis dat ’n handtekening in die gewone sin, naamlik in geskrewe vorm, hier vereis was vir doeleindes van waarmerking en bevestiging, selfs al was dit elektronies versend.
Wees liewer versigtig. Laat jou prokureur jou ooreenkomste opstel en bestuur. Dit sal hierdie soort risiko’s beperk. Vind ook uit oor die gebruik van ’n eksterne diensverskaffer vir veilige, gewaarmerkte en verifieerbare elektroniese ondertekening en storing. Indien jy en die ander party later sou koppe stamp, mag die integriteit en bewysregtelike waarde van jou elektroniese dokumente en handtekeninge deurslaggewend wees.
Met erkenning aan ‘n lesing deur George Findlay van Lexis Nexis en ‘n artikel deur LawDotnews / With acknowledgement to a lecture by George Findlay of Lexis Nexis and an article by LawDotNews.
SONJA JANSE VAN RENSBURG
ATTORNEY, NOTARY & CONVEYANCER
PROKUREUR, NOTARIS & AKTEVERVAARDIGER
VAN ZYL KRUGER INC
CELL NR: 082 781 3600
E-MAIL ADRRESS: sonja@vzk.co.za
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