Doing business in this technology-driven era, and the tools used by the modern business person, have constantly and rapidly evolved in the last few decades.
Gone are the days of posting letters or hand delivering documentation. Even the once modern fax machine has seen better days. Today, we send most of our messages, letters and documents via email; we buy and sell goods and services online; and we interact with customers, suppliers, clients and contractors via email and other electronic means.
Technology has not always been easy for everyone to embrace, but one needs to take a step into the digital world to succeed in business moving forward. However, this does influence the way you contract with the stakeholders mentioned above. And with contracting comes the Rules and Regulations of the law which still needs to be abided by.
This begs the question – can we cancel or amend a written contract via email (or text message)?
The non-variation clause
Most written contracts you sign during the course of normal business dealings will contain a standard non-variation clause. A typical non-variation clause will stipulate the following:
“No addition to, variation, or agreed cancellation of this agreement or any of the annexures or schedules hereto shall be of any force or effect unless reduced to writing and signed by or on behalf of all the parties.”
This effectively means that no amendment of the said contract, or cancellation thereof, will be valid if it is not reduced to writing and signed by both the contracting parties.
The objective of a non-variation clause is to protect the contracting parties against any casual or informal (usually verbal) amendments or cancellations of the contract. This creates contractual certainty but also prevents possible future disputes.
These days, we are not only concluding transactions by utilising emails, but we are also negotiating, amending and cancelling agreements. Does this still adhere to the non-variation clause?
What does the law say?
In the case of Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash and Another1, the parties entered into a written agreement that contained a non-variation clause as set out above. The parties cancelled the agreement during email correspondence and a big dispute erupted that ended up at the Supreme Court of Appeal. The question that arose is whether the cancellation of a contract by email is valid, if it is clearly stipulated in the non-variation clause that cancellation should be in writing and signed by both parties.
Electronic transactions are regulated by way of the Electronic Communications and Transactions Act No 25 of 2002 (hereinafter referred to as “ECTA”). In terms of ECTA, specifically Section 12 and 13, a legal requirement for an agreement to be in writing is satisfied if it is in the form of data messages, and data messages can be defined in terms of the ECTA as data generated, sent, received or stored by electronic means, i.e. emails.
This fulfils the requirement that the cancellation of the agreements must be “in writing”.
An electronic signature is defined in ECTA as ‘data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature’. The Supreme Court held that the typed names of the parties at the end of the emails were intended to identify the parties and accordingly constituted an electronic signature and this satisfied the requirement of a signature.
The Courts are thus pragmatic and practical about this issue rather than formalistic. This, in my view, ensures effective interpretation and application of the law in modern-day business transactions.
Taking the current legislative stance on the matter into consideration, it is clear that the modern business man or woman should be aware that concluding contracts and amending and cancelling such agreements, by email and including their name/s at the end of such email, will be accepted by the Courts as in line with the non-variation clauses in the agreements.
Other electronic means such as SMS, WhatsApp messages, Facebook messages and similar, would also fall within the provisions of ECTA read in line with the above-mentioned judgment.
1 2014 ZASCA 178.
© Arinda Truter – Schoemanlaw Inc. – 2018