Is cancellation of a written contract by e-mail valid?

Written by: Thinus Jacobsz

In the case of Spring Forest Trading v Wilberry (Pty) Ltd ( 725/13) ZASCA 178 the appeal court ruled that e-mails exchanged between parties to a valid contract can constitute a written agreement for cancellation of the contract.

The contract in this instance incorporates the standard “non- variation” clause providing for the cancellation of the contract to be in writing and signed by both parties to be valid. The decision of the lower court that the cancellation was invalid was over-turned by the appeal court.

The Electronic Communications and Transactions Act 25 0f 2002 gives legal recognition to transactions concluded electronically. In section 3 the act instructs courts to recognise and accommodate electronic transactions and data messages in the application of statutory or common law.

Section 12(a) of the act provides that any legal requirement for an agreement to be in writing, subject to exceptions (wills, bills of exchange, stamp duties and sale of immovable properties) is satisfied if it is in the form of a data message.

This leaves the further question whether names of the parties at the foot of their e-mails constitute signatures as contemplated in sections 13(1) and (3) of the act. These sections provide that where a signature is required by law, that requirement is met only where an “advanced electronic signature” is used. However, where an electronic signature is required by the parties and the parties have not agreed on the type of electronic signature to be used, the requirement is met in relation to a data message if (a) a method is used to identify the person and to indicate the person’s approval of the information communicated ; and (b) having regard to all the relevant circumstances at the time the method was used , the method was reliable as was appropriate for the purposes for which the information was communicated.

Important to note that the appeal court found that section 13(1) should be interpreted not only to include formalities required by statute, but must include instances where parties to an agreement impose their own formalities on a contract.

The parties to the contract in this case have not agreed to an advanced electronic signature and the court found that section 13(3) finds application. This means an electronic signature which refers to data attached, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature will find application. In this case the parties did require a signature to cancel the agreement , but failed to specify the type of electronic signature required for cancellation by e-mail.

The appeal court rules that because names typed at the foot of e-mails in order to identify users represent data which is logically associated with the data in the body of the e-mail, the name constituted a valid signature for cancellation of the contract.

It is clear that the contents of e-mails exchanged between parties to a written contract may play an important part on the way we do business in future as the name of a party written at the end of an e-mail may constitute a valid signature under circumstances.