To click or to ink? Are electronically signed sale of property agreements valid in SA?

26 March 2024 109
In the current digital era, the use of electronic signatures has substantially increased, reshaping traditional practices with their convenience and efficiency. From large corporations to small businesses, organizations are embracing electronic signatures to streamline processes and adapt to a digital business landscape. This article explores the validity of electronic signatures and specifically how it affects the validity of a sale of property agreement. 

The Electronic Communications and Transactions Act 25 of 2002 (hereinafter the “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.Section 13 of the ECTA gives legal recognition to electronically signed documents, whether it be commercial or general electronic contracts, and electronic signatures, intending to serve the same purpose as its ink and paper-based counterparts. However, Section 4(3) of the ECTA specifically prohibits, amongst other transactions in Schedule 1, the use of electronic signatures for signing an agreement to alienate immovable property.  

Section 2(1) of the Alienation of Land Act 68 of 1981 (“ALA”) states that the alienation of land shall only be valid if the alienation of land is contained in a written agreement and signed by the parties to the agreement. It can thus be assumed that this section requires the physical signature of a Sale of Property Agreement by pen and ink on paper by the parties entering into such agreement. 

However, in the Supreme Court of Appeal judgement of Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash and Another 2015 (2) SA 118 (SCA), it was stated that the approach of the courts when it comes to signatures have been “pragmatic” and not “formalistic”. It further states that the courts consider if the method of signature used does comply with the purpose of a signature, which is to “authenticate the identity of the signatory – rather than insist on the form of the signature used.” 

Interestingly, in the judgment of Borcherds and Another v Duxbury and Others 2021 (1) SA 410 (ECP), handed down in the Eastern Cape Local Division of the High Court, Gqeberha, the court found that a Sale of Property Agreement signed using an electronic application was valid. The signature was however originally signed on paper with ink whereafter it was scanned into the application and attached to the Sale of Property Agreement and did not qualify as data or as a signature that was created or generated electronically, and thus was not considered to be an electronic signature. It was held that the signature could be compared to a “handwritten” signature and not an electronic one. It was unfortunately not stated whether signatures as described in Section 13 of the ECTA would qualify as legally valid signatures for purposes of Section 2 of the ALA, and thus the issue of the use of electronic signatures for Sale of Property Agreements and the validity thereof was left open for interpretation. 

What we can take from the above is that at present, sale of property agreements in terms of the ALA must be signed in wet ink, alternatively, a scanned copy of a handwritten signature attached to the Sale of Property Agreement electronically can suffice, unless the judgement of Borcherds and Another v Duxbury and Others is overturned. It is suggested however that given the lack of certainty at present regarding electronic signatures, these not be used to sign the sale of property agreements, given the risk that such may not be seen as valid.

To conclude. Whilst electronic signatures have increased in popularity in modern business practice, their validity as it pertains to the sale of property agreements does not hold water under the current legal framework. Until clear guidance is provided by our courts or legislative changes are introduced, it is advisable to stick to traditional wet ink signatures to avoid potential legal complications and litigation regarding the validity of the sale agreement.

Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s). 
Related Expertise: Property Transfer
Related Sectors: Property Development