Electronic Signatures: Borcherds and another v Duxbury and others

15 January 2021 | Lucas Theron

1. The use of electronic signatures by parties on various documents has become common practice in South Africa. The Electronic Communications and Transactions Act 25 of 2002 (“ECTA”), which specifically provides for the use of electronic signatures in section 13 thereof, has been in force since 30 August 2002.
2. ECTA defines the terms “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.”
3. The popularity of electronic signatures has drastically increased due to the Covid-19 pandemic. This is in line with the severe rise in the use of digital platforms for the performance of ordinary day-to-day tasks, as has been observed worldwide recently.
4. The application of ECTA is subject to a few exceptions however. Section 4(4), read together with Schedule 2, of ECTA states that ECTA must not be construed as giving validity to the following transactions:

5. The exception contained in subparagraph 4.1 above is relevant for purposes of this article. Section 2(1) of ALA states that in order for an alienation of land to come into force and effect, it is a formality that a deed of alienation needs to be signed by the parties to the agreement. One would naturally therefore conclude that, taking into account the specific exception provided for in ECTA relating to alienation of immovable property, that traditional signatures (meaning a signature in wet ink on paper) is necessary in order to create a binding agreement for the alienation of immovable property.
6. The reasons of the legislature to exclude alienations of immovable property from the application of ECTA may have included the fact that sale of property transactions can be deemed as significant transactions that often entail great sums of money and hold substantial implications for the parties involved. Due to the rapid development of digital platforms and customs in recent years, we may see a movement towards acknowledging electronic signatures for purposes of immovable property sale agreements and a removal of the exclusion contained in ECTA currently.
7. The judgement in Borcherds and Another v Duxbury and Others is seemingly contradictory to the legislative position as set out above. This case was heard in the High Court of Pot Elizabeth on 13 August 2020 and the Judgement was delivered on 22 September 2020. One of the questions before the Court was whether or not the use of an electronic signature on a deed of sale for immovable property created a binding agreement between the parties. The Court found that the electronic signature that was used was valid and therefore a valid contract did in fact come into force.
8. Honourable Acting Judge O.H. Ronaasen in arriving at his finding as set out in paragraph 7 above, stated that the approach of courts to signatures has always been pragmatic rather than formalistic. The function of a signature is to authenticate the identity of the signatory and courts therefore try to satisfy themselves that the method of signature used in a specific instance fulfils this function. The learned Judge also referred to case law and a work by Van Huyssteen, Lubbe and Reinecke titled “Contract – General Principles” in support of the use of electronic signatures. The Court found that through the electronic signature used in this matter, the contract was indeed signed as envisaged in section 2(1) of ALA by the seller with the intention of being bound to the contract as seller.
9. The Judgement in the Borcherd case therefore creates uncertainty to a certain degree with regard to the use of electronic signatures for purposes of signing a deed of sale for immovable property due to the fact that on face value, it is at odds with section 4(4) of ECTA.
10. It is the opinion of writer hereof that prospective buyers and sellers of immovable property should rather play it safe than sorry and remain within the bounds of the current general practice and affix traditional signatures to their immovable property sale agreements, until (if at all) the exclusion contained in section 4(4), read together with schedule 2, of ECTA is removed by the legislature.