Electronic Signatures Uses in E-Commerce

In the beginning, seals were attached to documents to authenticate the contents. Later, signatures were added to documents. Today, we live in an electronic age where many electronic documents are being created.

 It is difficult to authenticate electronic documents without affixing anything. The times have changed and signatures can now be used to authenticate electronic documents. This is possible thanks to the functional equivalent doctrine. Because signatures are still used on paper, electronic signatures can be perceived as simple. Electronic signatures are influenced by international norms and regulations. However, South Africa has its own legislation. Both the act and the case law can be used to help you understand how an electronic signature is defined and used.

Electronic signatures according to South African law

In schedule II, chapter I, the ECTA defines an electronic signature as data attached, incorporated into, or logically associated with other data that is intended to be used as a signature. Currently, the ECTA uses a two-pronged approach to distinguish between simple and advanced electronic signatures (hereinafter referred to as "SES"). A simple electronic signature refers to a signature that does not have advanced qualifications or security. They are popular, contrary to popular belief. They are convenient and can be used for quick transactions that are required for business transactions. AES requires certification and authentication by third-party service providers that use biometrics. Section 37 of the ECT Act did not allow for accreditation of a single provider before 2011. This changed in 2011 with the accreditations of LAW Trusted Third Party Services Ltd (LAWtrust) and the South African Post Office (2013). An electronic signature issued by a trusted third party has certain evidential benefits that are not available with simple electronic signatures.

Case law regarding electronic signatures

The ECTA's provisions regarding e-signatures have not been well covered in the law. The limited, but recent, case law regarding AES and SES could provide some guidance and establish a precedent for future business use of electronic signatures.

  • Recent case law regarding Simple Electronic Signatures

In 2015, Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Eco wash and Another, the agreement stipulated that certain clauses could only be canceled in writing and signed off by the parties. The Supreme Court of Appeal (SCA), ruled that the typed names of the parties at email correspondence between them constituted an electronic signature, as required by section 13(3)6 of ECTA. Accordingly, the contract was deemed to have been canceled.

Absa Bank Ltd v Le Roux7 confirms Section 15(4) ECTA. This further emphasizes that a data communication, such as an electronic signature produced in any legal proceeding, is admissible evidence, and is rebuttable evidence of the facts contained within. This would mean that a data message produced in legal proceedings is assumed to be factually correct.

  • Recent case law regarding Advance Electronic Signatures

The recent 2020 case of Massbuild and Tikon saw an electronic signature being added by the financial manager of the first defendant, who was given the authority to bind him. The court had to determine the type of signature that was required for a contract or suretyship contained in a data message. The court ruled that section 6 of 1956's General Amendment Act had not been amended to provide the required signature for a contract of certaintyship. The court ruled that if the suretyship is embodied within a data message the signature must comply with the requirements of an AES as specified in section 13(1).

If electronic signatures are required by parties to an electronic transaction but they have not agreed on the type, the requirement for a data message is fulfilled.

  • A method is used to identify the person, and to indicate approval of the information being communicated:
  • Taking into account all relevant circumstances, the method was as reliable and appropriate as possible for the purpose for which it was used.

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Conclusion

An AES is beneficial for any business because it offers greater security and can prevent fraudulent signature use. An AES acquisition requires additional financial and administrative resources. Although they are more commonly used, the SESs have a lower security threshold. Many transactions were conducted online during the pandemic. It would be in a company's best interests to acquire an AES, especially for electronic documents which are crucial in concluding agreements. However, in cases where an AES is not financially feasible, it is important to alert clients and the public about fraudulent signatories. SchoemanLaw offers more information on tech law.