The concept of the Digital Signatures (or E-Signatures) ties in with many articles written and many discussions had over the upcoming Digital Revolution and its effects on business – particularly with regards to digitizing processes and efficiency. The Second Machine Age by Eric Brynjolfsson and Andrew McAfee discusses these concepts in depth and gives interesting insights into our digital futures.
One aspect of this change that concerns us all is how it affects the law – what constitutes a contract in this new Digital Age? What forms of communication and acceptance of terms indicates a valid and binding agreement? How does this affect how various regulations are tested by case law?
In the first case of its kind in South Africa, the Supreme Court of Appeal held that emails sent between two parties relating to a contract where both parties signed their names at the end were sufficient to cancel a contract, that had the provision for cancellation only in writing and signed by both parties .
The case stated that “The question is whether the method of signature fulfils the function of identifying the signatory, rather than to assist on the form of signature to be used”. This indicates that a physical handwritten signature is no longer a requirement; an electronic version is equally valid.
This has a large impact on the introduction of electronic signatures into business. There are currently 3 different ways that e-signatures are being used commercially:
- The Click Wrap. An example of this is when a user ticks the “Accept Terms and Conditions” box when making a transaction online. Generally, the user is identified as the signatory using the details used to log into the site.
- Electronic Signatures. When a user physically signs using a stylus or their finger on a digital medium such as a tablet, or a signature pad. This new case law would indicate that this form of a signature would not be required for a binding contract.
- Any form that requires a formal authentication process as described in the ECTA.
This affects the digitisation of the contracting process. The way is now open for technology to seamlessly put two parties together so that they can contract electronically – transactions can now be paperless with relative ease. The information would be available digitally for the organisation and end-users to view and manage. This confirms the concepts that any process that is highly repetitive, should be digitised.
Many organisations have been slow to take up electronic signatures and digitisation, claiming that the legal barriers and risks of dispute are too high. This case should break down those barriers and prove that it’s time to embrace our new age: The Digital Revolution.
References:
Please view the Electronic Communications and Transactions Act, 2002
No. 25 of 2002, http://www.internet.org.za/ect_act.html#INTERPRETATION_OBJECTS_AND_APPLICATION, CHAPTER III, FACILITATING ELECTRONIC TRANSACTIONS Part 1, Point 13.