Can Creditors continue with litigation on an E- Contract if the traditional rules of concluding a contract are not followed?

Traditionally, when a Contract of Loan is concluded an individual normally goes to the Financial Institution to complete the necessary…
By Gwen Mynhardt
1 April 2023

Traditionally, when a Contract of Loan is concluded an individual normally goes to the Financial Institution to complete the necessary forms and take all ancillary annexures for consideration of that loan and await approval of it. The Financial Institution would then start the process of approving the Contract after having considered the following:

  1. Have the parties reached consensus and do both parties to the Agreement/Contract have an intention to create reciprocal rights and duties which they agree to be bound to?
  2. Whether each party has the necessary required capacity to act in execution of their rights and obligations.
  3. The Agreement/Contract must be legally possible and permitted within the parameters of the law.
  4. Whether the Agreement/Contract is physically possible, implying that the parties to the Contract are able to receive rights and perform their obligations.
  5. Formalities are to be complied with.

Living in ever changing times with technology being accessible to most, there exists no need to physically go into a Branch or attend a Financial Institution anymore as your Loan Agreement/Insurance Contract can be applied for and approved online.

Life has become as simple as that.

The introduction of so called ‘’E-Commerce Contracts’’ has resulted in parties acknowledging all the terms and conditions encapsulated in a ‘’data message’’ by merely putting a Mark, PDF Electronic Signature or even Acknowledgement on an identifiable email signature.

The introduction of the Electronica Communication and Transmission Act 25 of 2002 commonly referred to as ECT Act has opened the door to E-Commerce Contracts commonly known to us as ‘’E-Contracts’’ for both Commercial- and Non-Commercial Contracts and can now be concluded by means of the parties agreeing to the necessary online requirements being met in terms of S13(3) of the Act.

By implication, this Act is aimed at giving a level playing field and regulating Contracts/E-Commerce Agreements by giving electronic documents the same status as formally ‘’in presence signed’’ Contracts albeit the requirements are met as set out above.

Section 22(1) of the Electronic Communications and Transactions Act, No 25 of 2002 ‘’ECT Act’’ provides that “an Agreement is not without legal force and effect merely because it was concluded partly or in whole by means of data messages”.

So what does this actually mean for creditors who have contracted in part or whole via data message or have formal cancellation of a Contract on email?  Will a Creditor still be able to proceed with litigation based on Breach of that Contract or formally cancelling such Contract via email which has been accepted by both parties?

The short answer is yes.

Creditors will still be able to impose statutory remedies for Breach of Contract even if the Contract was signed online, in part or wholly, and or amended or cancelled via email subject to Contract specifically excluded from being concluded on an

E-Contract basis as set out in the Act.

When one considers the matter of Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and another (2015) the Courts were to consider whether an email cancelling a Lease Agreement was considered sufficient in terms of the written Agreement and its non-variation clause stating that any variation must be reduced to writing and signed by both parties.

The crux of this case that the Court’s had to consider was:

  1. Has the Agreement been reduced to writing and permitted so in terms of the law?
  2. Are the parties clearly identifiable either through signature, marking or email signature that could pass as an identifiable ‘’mark’’ in terms of S13(3) of ECT Act.
  3. Was the intention of the parties to receive and reciprocate such consent and doing so via email whether expressly, saliently or tacitly agreeing to same?

The Court found that this cancellation of a Contract via email was indeed sufficient and that the non–variation clause, wherein amendments were to be reduced to writing and signed/acknowledged by both parties, even by means of an email was in fact sufficient as both email signature was identifiable to be that of the contracting parties.