Is it possible to cancel a contract and to sign it with just the use of emails? In the case of Spring Forest Trading v Wilberry, the South African Supreme Court of Appeal held that electronic signatures were binding and that the parties had validly cancelled a contract by email signature in terms of a non-variation clause requiring any changes to the contract to be in writing and signed.
This is a landmark case for electronic signatures and non-variation clauses in South African law. You can read the judgement here.
What happened in Spring Forest Trading v Wilberry?
Spring Forest Trading rented car washing equipment from Wilberry in terms of various rental agreements. The agreements had a non-variation clause saying that no variation or consensual cancellation would be valid unless in writing and signed by the parties.
Spring Forest Trading stopped paying rent and the parties met to discuss the way forward. After the meeting, Wilberry sent Spring Forest Trading an email saying that one of the options was for them to ‘Cancel [the] agreement and walk away.’
Spring Forest Trading replied asking Wilberry to confirm that if they chose to walk away there would be no claims or legal action from either side. Wilberry confirmed that there wouldn’t be if Spring Forest Trading returned all rented equipment and paid all outstanding rent. Spring Forest Trading replied accepting the cancellation offer.
Spring Forest Trading duly returned the rented equipment and paid the outstanding rent, but Wilberry tried to prevent them from repudiating the rental agreements by getting an interdict against them in the KwaZulu Natal High Court on the grounds that the parties had not consensually cancelled the agreements by way of the emails between them. This case is an appeal against that decision.
How did the court find electronic signatures binding?
The court held that the email signatures in the emails between the parties met the requirements for an ordinary electronic signature in terms of the Electronic Communications and Transactions Act 25 of 2002. You can read more about electronic signatures and the law here. This means that there is now case law confirming that electronic signatures are binding in South Africa. This is very important, because there has been no case law directly confirming the legal validity of electronic signatures in South Africa – until now.
How did email signatures satisfy the non-variation clause?
South African courts have historically upheld non-variation clauses. The court held that an ordinary electronic signature was sufficient to satisfy the non-variation clause and that an advanced electronic signature was not required. This means that contracts can be varied by an exchange of emails between the parties despite a non-variation clause.
Actions you can take
- Learn what electronic signatures are and how to use them by attending our workshop on practically using electronic signatures and the law.
- Educate your employees, customers, or prospects about electronic signatures using our written guide to electronic signatures.
- Prevent your email messages from being construed as varying any agreements by using our email disclaimer.
- Prevent employees from varying agreements by email with our email use policy.
- Protect your contractual rights by having us review your agreements and redraft non-variation clauses, where necessary.
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