COMMERCIAL LAW: Court rules cancellation via e-mail acceptable

The Supreme Court of Appeal (“the Court”) was recently faced with a decision as to whether the cancellation of a contract via email constitutes valid consensual cancellation between parties to a prior contract containing a non-variation clause. The Court was satisfied that the email exchange between the parties did amount to the consensual cancellation of the agreement entered into between them as the appellant in the matter fulfilled all obligations required to have the agreement cancelled. On determining the validity, the Court considered sections 13(1) and 13(2) of the Electronic Communications and Transactions Act 25 of 2002 (“the Act”), which reads:

‘(1) Where the signature of a person is required by law and such law does not specify the type of signature, that requirement in relation to a data message is met only if an advanced electronic signature is used.

(2) ……

(3) Where an electronic signature is required by the parties to an electronic transaction and the parties have not agreed on the type of electronic signature to be used, that 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 as reliable as was appropriate for the purposes for which the information was communicated.”

The Court made a distinction between signatures required by law and the requirement of signatures as self-imposed obligations agreed to between the parties to a contract. Where a signature is required by law, an advanced electronic signature is essential in terms of section 13(1) of the Act. The Court continued to state that section 13(3) of the Act applies to private agreements between parties and as long as “a method is used to identify the person and to indicate the person’s approval of the information communicated” and the method used is “as reliable as was appropriate for the purposes for which the information was communicated”, the signing off of an email with the party’s name is sufficient to constitute a signature for the purposes of varying and cancelling a written contract with a non-variation clause.

This matter sets a crucial precedent to the effect that contracts with a non-variation clause providing that any variation to a contract must be in writing and agreed to between the parties and signed by the parties can be validly cancelled via email if there is a meeting of the minds and if the parties communicating their intentions are identified by way of a reliable and appropriate method.

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