FWIW cncllg cntrct TTYL B4N

If you have a smartphone, you probably use Whatsapp daily. This handy little app has 1,3 billion monthly active users, but is often controversial – sending your data to Facebook for targeted adverts and friend suggestions, and encrypting communications to lock out cybercriminals but also government agencies investigating terror networks.

Our whatsapp conversations are increasingly being entered into evidence in court proceedings.

A Saudi man reported that he divorced his wife after the app showed that she had received and read his messages, but failed to respond to any of them. This process, known as “blue ticking” in reference to the little blue ticks that show that your message has been displayed on the recipient’s phone, also played a role in a Taiwanese woman’s divorce. She submitted evidence of her husband continually ignoring her messages, and this was accepted as evidence that the marriage had irreparably broken down.

An Italian divorce lawyer reported that evidence of whatsapp messages between spouses and their extra-marital partners was being used in around half of the divorce cases going to trial there.

Closer to home, the country scrutinised emotional whatsapp messages exchanged between murder convict Oscar Pistorius and his victim Reeva Steenkamp, provided as evidence of a tumultuous and emotionally abusive relationship.

Increasingly, even business negotiations may take place via whatsapp. But are these communications legally binding?

The Electronic Communications and Transactions Act of 2002 (ECTA) gives formal legal recognition to transactions concluded by email. The Act obliges courts interpreting its provisions to recognise and accommodate electronic communications in applying statute or common law.

Our law recognises a data message (such as an email or whatsapp message) as adequate in most cases where the law or an agreement requires something to be in writing. Notable exceptions where agreements cannot be concluded electronically include deeds of sale of immovable property, and last wills and testaments – even where an advanced electronic signature is used.

The law or an agreement may also require that a document be signed by a party. The question then arises as to whether one can sign a document via email or whatsapp. This question was recently considered by the Supreme Court of Appeal (SCA), in the case of Spring Forest Trading (SFT) versus Wilberry (W).

W owned car wash equipment, and contracted with SFT to operate car washes at several locations, using its equipment, for which SFT paid W rentals. SFT fell into arrears, and the parties entered into discussions to remedy the situation. A face-to-face meeting was held, after which SFT’s representative emailed W’s representative, recording in writing four proposals which W had offered it. The second proposal was recorded as “Cancel agreement and walk away.” SFT sought confirmation that, if this proposal was pursued, there would be no legal claims by either party.

W’s representative responded by email, confirming that, provided all rental arrears were paid, there would be no legal claims.

SFT then emailed W, advising that it accepted the second offer.

SFT returned the car wash equipment and paid the rental arrears. That might have been the end of the matter. It was not, however – SFT continued to run car washes from the same locations, now renting equipment from W’s competitor – probably not the outcome that W had foreseen.

W rushed to court on an urgent basis, claiming that its agreements with SFT had not been validly cancelled, and seeking an interdict to prevent SFT from operating car washes while it prosecuted a claim for damages. The High Court was sympathetic, and granted an interdict, agreeing that the agreements had not been validly cancelled. The judge deciding the matter found that the agreements – which required consensual cancellations to be reduced to writing and signed by both parties – did not allow for cancellation via an exchange of emails.

SFT appealed this judgment to the SCA. It relied upon ECTA, which states that, where parties to an electronic transaction require an electronic signature, but have not agreed upon the type of electronic signature, then the requirement is met if (1) a method is used which identifies the person and indicates their approval of the information communicated and (2) the method was as reliable as was appropriate for the purposes for which the information was communicated, having regard to all the circumstances. It argued that the consensual cancellation had been reduced to writing in the form of the exchange of emails, and had been signed by the parties when they ended each email by typing their full names.

W disagreed, arguing that (1) the emails were evidence of negotiations but could not constitute an actual agreement to cancel, (2) at best, the emails only referred to the rental agreements and not the master agreement between the parties, and (3) even if ECTA applied, then an advanced electronic signature was required, and this was absent.

The SCA found: (1) the emails clearly amounted to an agreement and not mere negotiations, as the parties reached consensus that they could walk away once arrears were settled and equipment returned, with no further legal consequences and (2) “walking away” could only mean that all agreements would be cancelled.

On (3), the court examined ECTA in more detail, finding that:

  • a data message could unquestionably satisfy the requirement that an agreement be in writing;
  • an advanced electronic signature was only required where imposed by law, and not in private agreements: it involved an elaborate and strict application process, for accredited products and services only. The parties did not deal in such products or services;
  • between private parties who required a signature, a standard electronic signature would suffice.

W argued that the recordal of a party’s full names at the end of an email did not meet the ECTA requirements for an ordinary electronic signature – there was no reliable method to identify the parties and indicate their approval of the information communicated.

The court disagreed, pointing out that courts have always taken a pragmatic approach to signatures, and required that a signature authenticates a signatory’s identity, without insisting on specific forms. In appropriate cases, a witness touching the pen while a magistrate made a mark on her behalf, had been accepted as a valid signature. The typed names identified the parties, were logically connected with the information that preceded them, and satisfied the ECTA requirements for an ordinary electronic signature.

The appeal was accordingly upheld, and the interdict against SFT set aside.

Had the parties not appended their names or another form of signature to their emails, however, the requirement that a consensual cancellation be signed by both parties would not have been met, and the purported cancellation would have been ineffective.

In summary, electronic communications via email, whatsapp and other means are increasingly relied upon in commerce. Parties engaging in electronic communications in business matters should be aware that these communications may feel casual but can be legally binding upon them. Where a party is negotiating by text or email but intends for any resultant agreement to be written up and signed on the printed page before it will be binding, this should be spelled out clearly – before an “in principle” agreement is reached. Failure to do so can mean that a party is bound by the terms set out in the text exchange, while other pertinent clauses the party may have wished to insist upon will be excluded.

While email and text are convenient, in cases such as the one above, the presence or absence of a signature can have far-reaching and costly implications. When emails and texts are intended to have legal consequences, a party would be wise to ensure that these communications still fulfill all legal requirements – such as a full signature where one is required. Had the parties’ representatives ended their emails with an unsigned greetings (“Best”) or an initial for shorthand (“C”), the outcome of the case may have been quite different – and a business potentially ruined in the process.

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