E-mail contracts legally binding
E-mails about a contract could be considered binding, law firm Webber Wentzel said on Thursday.
The firm referred to a Supreme Court of Appeal (SCA) ruling last month that found e-mail negotiations and typed e-mail signatures binding.
“Given the pervasive use of e-mail in the workplace and in commercial interactions it is important to exercise caution,” Webber Wentzel technology, media, and telecommunications head Robby Coelho said.
The SCA judgment on November 21 saw it uphold an appeal by Spring Forest Trading against Wilberry (Pty) Ltd.
The companies had agreed that Spring Forest would lease mobile dispensing units from Wilberry for use in its car wash business.
They signed agreements with clauses providing that cancellation could only be made in writing and signed by both parties.
When Spring Forest could no longer meet its rental commitments the parties met on February 25 last year and agreed to cancel their agreements.
The terms of the cancellation were recorded in an e-mail exchange and the names of the parties appeared at the bottom of each e-mail.
Spring Forest then entered into a similar business agreement with another entity. Wilberry approached the Durban High Court to interdict its business pending an application for breach of contract.
The high court granted the interdict and Spring Forest appealed to the SCA.
The SCA upheld the appeal on the basis that contracts could consensually be cancelled via e-mail, and referred to provisions of the Electronic Communications and Transactions Act (ECTA).
It found the ECTA’s requirement for an “advanced electronic signature” did not apply to private agreements but rather to cases where a statute or law required a signature.
Thus, names typed at the end of e-mails constituted electronic signatures in private agreements.
Coelho said the ruling could have broader implications for agreements where notice or consent had to be given in writing.
The principles could also extend to correspondence through other technologies such as text messages.
He recommended that contracts should expressly regulate whether electronic communications were permitted, to avoid disputes.
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