Electronic communication
If ‘data’ in email is connected with other data in mail, signature requirement is satisfied
A NON-variation clause in a written contract restricts the parties from changing the terms of the contract and cancelling the agreement unless both parties agree to the changes or cancellation. A non-variation clause may read as follows: “No variation of the terms and conditions of this Agreement or any consensual cancellation thereof shall be of any force or effect unless reduced to writing and signed by the parties or their duly authorised agents.”
If parties were to conclude a lease contract or to change a lease term electronically, such as by communicating via e-mail, is the lease or the change valid?
What if a clause in a lease stipulates that no change to the contract is valid and binding unless parties mutually agree to it, and such agreement must be reduced to writing and signed by the parties? This means that in terms of such a “non-variation” contractual clause, any information or discussion outside the agreement is not binding unless it is written down and signed by both parties.
A tenant informs the landlord’s letting agent that she can no longer pay her rentals on the first day of the month and all future payments will be done on the fifth day. The agent, who is authorised by the landlord to manage the lease and to act on his behalf in all matters relating to the leased property, confirms via e-mail that as long as rentals are paid by the fifth, this would be in order.
A few months later, the landlord dismisses the agent and cancels the lease for breach, on the grounds that the tenant failed to pay on the first day of each month as per their written agreement. The landlord rejects the tenant’s e-mail communication with the agent. He argues that it does not constitute a written variation, mutually agreed and signed on as required by the lease.
If the landlord issues summons to evict the tenant for breaching the lease agreement, he is likely to fail if the tenant’s defence is the e-mail communication with the agent.
The Electronic Communications and Transactions Act 25 of 2002 (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”. In this example, the agreement between the tenant and the agent regarding the change in the lease condition would be legally binding in terms of ECTA.
The names of the parties and the content of the e-mail would be sufficient for a valid variation of the lease as stipulated in the non-variation clause. The provision of ECTA would be satisfied, in that the parties can be identified, which would constitute their electronic signatures, and the approval of the information (variation agreement consented to).
ECTA would apply to all residential and commercial property leases when electronic communication is used to conclude a lease or for effecting changes. Section 12 of ECTA states: “A requirement in law that a document or information must be in writing is met if the document or information is (a) in the form of a data message; and (b) accessible in a manner usable for subsequent reference”.
But electronic signatures cannot be used for a long-term lease of land exceeding 20 years, signing of a will, an agreement for the sale of immovable property and bills of exchange.
Judge Azhar Cachalia of the Supreme Court of Appeal, in Spring Forest Trading v Wilberry 2014 ZASCA 178, held that the e-mails between the parties met the requirement of ECTA. The dispute related to a non-variation clause, Wilberry contending that the cancellation agreement to release Spring Forest Trading from the lease was not valid since the communication between the parties was through e-mail communication.
Judge Cachalia said the legal requirement for an agreement to be in writing was satisfied in the form of a data message, in terms of Section 12a of ECTA.
“The Act describes an electronic signature – which is not to be confused with an advanced 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’.
“Put simply, so long as the ‘data’ in an e-mail is intended by the user to serve as a signature and is logically connected with other data in the e-mail, the requirement for an electronic signature is satisfied.
“This description accords with the practical and non-formalistic way the courts have treated the signature requirement at common law.”
The judge found that the names of the parties at the end of the five e-mails exchanged between them were valid signatures and the variation confirming the cancellation was legally binding.
It would be beneficial to incorporate a clause in a lease that electronic communication in the form of e-mails, instant messaging by way of text messages or SMS (short message service) and WhatsApp messenger, Telegram including other data messaging apps, are acceptable means of written communication. In the event of a dispute, neither the tenant nor the landlord can claim that he or she had agreed to certain changes verbally or that only one form of written endorsement is possible.
Parties, however, need to ensure that electronic communication is safely stored, can be retrieved when needed, and perhaps hard copies made for future reference especially when a dispute arises for which solid evidence may be crucial.
The storage of personal information, however, is regulated by another law: the Protection of Personal Information Bill 2012. This law deals with gathering minimum information about an individual, such as a tenant, that must not infringe on his or her privacy. The storage of such information in the landlord’s custody must be secured “to prevent unauthorised access, use, disclosure, loss, destruction, copying or modification of any personal information”.