contract

contract

Can you cancel a contract by email?
Posted on 16 March 2015

Your agreement is signed, sealed and delivered! You know that in the agreement a non-variation clause stipulates that no variation or consensual termination of the agreement shall be of any force or effect unless in writing and signed by both parties thereto. This clause seems simple enough…. If you want to cancel the agreement, all you have to do is ensure that it is in writing and signed. What can possibly go wrong?

We live in a day and age where electronic technology has become the primary platform for communication. Emails, Twitter, Facebook, Instagram and instant messaging services such as Whatsapp and BBM are electronic platforms we are all familiar with. The question that now arises, however, is whether an email would meet the standard requirements of a non-variation clause requiring any variation or cancellation of an agreement to be reduced to writing and signed by both parties to the agreement.

This question came into focus in the Supreme Court of Appeal case of Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash & Another. Here the court found that the exchange of emails between parties to an agreement, with each of the parties typing their first names at the end of the emails, was sufficient to cancel an agreement, which could only be cancelled in writing and signed by both parties.

In this case the court relied on the Electronic Communications and Transactions Act 25 of 2002 (“the Act”) and found that the requirement that an agreement had to be cancelled in “writing”, is satisfied if it is in the form of data messages and in this case the email met this requirement. With regards to the “signed” requirement, the court had to consider whether the parties’ names at the end of the emails, constituted a signature in terms of the Act, which provides that where an electronic signature is required by the parties and the parties have not agreed on the type of electronic signature to be used, that requirement is met 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 signature is commonly understood as a person’s name written in a distinctive way and serves as a form of identification. Our courts have generally adopted a practical rather than a formalistic approach to signatures. The question which remains, however, is whether the method of the signature used fulfils the functions to authenticate the identity of the signatory, rather than insist on the form of signature used. In terms of the Act, an electronic signature is 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’. In the case above, the court held that the typed names of the parties at the end of the emails were intended to identify the parties and therefore constituted data that was logically associated with the data in the body of the email correspondence and accordingly constituted an electronic signature and this satisfied the requirement of a signature.

While our courts treat email communication in a similar manner to written communication, we cannot help but wonder whether a court will also be comfortable with a Tweet, Facebook, Whatsapp or BBM message whereby a cancellation message is sent merely with a typewritten name at the end.

It is evident from the above, that a non-variation clause is not necessarily that simple. Contracting parties should be cautious of their communications with each other, especially when using emails and messaging platforms such as Twitter, Facebook, Instagram, Whatspp and BBM. In order to avoid disputes and ambiguity in the future, it is advisable to stipulate in the agreement that electronic signatures will either not apply to amend or cancel an agreement or alternatively to regulate clearly in the agreement how electronic communications will apply. If you are unsure of what your contract says or unsure as to how to incorporate/exclude the position regarding electronic signatures and electronic communication in/from your agreements, contact a commercial specialist that can assist you to address your concerns. The reality is, electronic communication cannot be ignored and it is prudent to ensure that you understand how to safely orientate yourself contractually within our digital age.

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