“Add to cart”: Doing business in a COVID-19 world part 4 – Concluding contracts online

2020 has seen the like of MS Teams, Zoom, Google Meet and WhatsApp becoming the new norm when doing business in a COVID-19 world and with many companies opting to continue having their employees work from home, the new norm is set to continue well into 2021. But with fewer physical meetings taking place, how do you conclude, vary and renew contracts online?

Firstly, consider the type of contract being concluded in order determine which type of signature is required. In South Africa, three types of signatures are valid when entering into contracts, namely, wet ink signatures, electronic signatures, and advanced electronic signatures.

A wet ink signature refers to the signature by a person of their name with a pen on a physical document. An electronic signature includes a traditional wet ink signature on a soft copy of a document, the typewritten name of a party at the foot of an email, an “I accept” tick box on a website or mobile application, using a stylus pen or finger to sign on a tablet, and a signature captured to a software product, such as DocuSign® or Adobe Acrobat Reader DC. An advanced electronic signature is a specialised type of electronic signature that has been accredited by the South African Accreditation Authority in order to guarantee the authenticity of the signature. 

Secondly one must have regard to whether;

  • the parties to the contract stipulated in the contract that it may not be signed, varied or renewed electronically (usually found in the non-variation clause of the contract) or
  • the contract is one of the specific contracts in South African law that require a wet ink signature or advanced electronic signature.

Examples of contracts prohibited from being signed by way of electronic signature (whether a standard or advanced electronic signature) include contracts for the sale of immovable property, long-term lease agreements (more than twenty years in duration), bills of exchange (such as cheques), and Last Wills and Testaments or codicils. Copyright assignment agreements, suretyship agreements and the signing as a Commissioner of Oaths can either be executed using a wet ink signature or advanced electronic signature.

What about initialling each page and witness signatures?

Except in the case of a Last Will and Testament, it is not mandatory to initial every page of a contract. The practice of initialing every page has traditionally been used in order to prevent the parties from later inserting a false or modified page into a contract, and also to prove that each party has indeed read every page of the contract. Note that the failure of a party to read a contract is not considered a valid excuse for that party not to be bound to the contract, therefore it is unnecessary to prove a reading of the contract.

As with initials, a witness signature is only required where the contract itself or a prior contract requires witnesses to sign the contract, or in the case of a Last Will and Testament.

Although not a legal requirement, certain financial institutions may require contracts for the sale of immovable property to reflect an identifiable witness before they will consider an application by the purchaser for finance.

The law allows for most types of contracts to be signed, varied and renewed electronically, and does not require contracts to be initialed on every page or witnessed in order to be considered valid This means that parties must be cautious of discussions held and even emoji’s (https://www.kisch-ip.com/article/dont-let-your-emojis-get-best-you) used on WhatsApp and email, as contracts may be entered into or varied through mere dialog on these forums.