In the 21st century we are confronted with electronics each day. Electronic ways of doing everyday tasks assist commerce and allow business to take place at a pace much quicker than even 20 years ago. As lawyers we have to consider the legal implications of using technological means versus the traditional methods. One of the areas to consider is the impact of electronic signatures specifically in the area of contracts of sale of immovable property.
The Electronic Communications and Transactions Act 25 of 2002 (“ECTA”) regulates the use of electronic signatures in South African law. Section 13(2) of ECTA states that an electronic signature is not without legal force or effect merely because it is electronic. This section establishes the validity of electronic signatures in the legal sphere and essentially places them and traditional wet signatures on equal footing. It would therefore not be a defence for a defendant or respondent to argue that a contract is invalid because of the fact that it was signed by means of electronic signature.
Because of section 13(2) of ECTA one is inclined to think that electronic signatures on contracts of sale of immovable property are valid, yet with all aspects of law, there is a rule and there are exceptions. Section 4(4) of ECTA is crucial in this regard. Section 4(4) states that ECTA must not be construed as giving validity to any transactions mentioned in Schedule 2. Upon reading Schedule 2, one is encountered with a list of four different scenarios that are excluded from the scope of ECTA. Item 1 of Schedule 2 stipulates that an agreement for the sale of immovable property as provided for in the Alienation of Land Act is excluded from the scope of ECTA. As such, there is no legal basis for the use of electronic signatures in concluding contracts of sale of immovable property. The other three types of contracts excluded from the scope of ECTA are: (1) agreements for the long-term lease of immovable property exceeding 20 years; (2) the execution, retention and presentation of a will or codicil; and (3) the execution of a bill of exchange. In conclusion, you can validly conclude a contract of sale for your car electronically, but if you are planning on selling your current house or purchasing a new house, you will need to sign the contract with a traditional wet signature.