What’s the deal with Electronic Signatures?


When can an Electronic Signature not be used?

In certain instances, the use of electronic signatures is not permitted, these include:

1. Contracts regarding the sale of immovable property. The Alienation of Land Act specifically requires that all agreements be signed on paper.

2. Rental agreements for the lease of immovable property that are considered long- term (in excess of 20 years).

3. The signing of a will or testamentary writing. Wills and codicils (addenda) to wills should be signed as a written document and in the presence of witnesses.

4. According to The Bills of Exchange Act of 1964 documents such as cheques and pledges must be signed in writing.

Case Law

The Supreme Court of Appeal (SCA) recently had to consider the meaning of signatures and electronic signatures in the matter of Global & Local Investments Advisors (Pty) Ltd v Nickolaus Ludick Fouché.

The Facts

Mr. Fouché provided a written mandate to Global & Local Investments Advisors (Pty) Ltd (Global) to act as his agent and invest money with Investec Bank on his behalf. According to the written mandate, ‘All instructions must be sent by fax to 011 486 2915 or email to monique@globallocal.co.za with client’s signature’.

Global opened accounts for its clients at Investec and managed these accounts on its clients’ behalf in return for a fee. In August 2016, Mr. Fouché’s email account was hacked. The fraudsters sent three emails to Global instructing them to transfer specific amounts into the accounts of named third parties. Two of these emails ended with the words ‘Regards, Nick’ whilst the third ended ‘Thanks, Nick’.

A total of R 804,000.00 was paid out from Mr. Fouché’s accounts to these unknown third parties. When Mr. Fouché became aware of the fraud, he notified Global. Mr. Fouché claimed repayment of the amount transferred on the basis that Global had paid out contrary to the written mandate he had with them.

Global argued that it had acted within the terms of the mandate on its instructions that came from Mr. Fouché’s legitimate email address and that the typed name ‘Nick’ at the end of each email satisfied the signature requirements when considered in the light of s 13(3) of the Electronic Communications and Transactions Act 25 of 2002 (the ECTA). Mr. Fouché alleged that the instructions did not bear his signature, whether in manuscript form (physical) or in electronic form.

The Finding:

On appeal the SCA grappled with the proper interpretation of the written mandate and whether Global had acted in breach thereof. The SCA indicated that in construing the mandate the context must be taken into account and noted that “in the commercial and legal world signatures serve established purposes. Signatures are used as a basis to determine authority and can be checked for authenticity”.

The SCA held that in order to be able to resort to section 13(3) of the ECTA, Global would have had to show that in terms of the mandate an electronic signature was sufficient. As there was no mention of the word electronic in the mandate, the SCA could not fault the finding of the Court below and Global’s argument was rejected.

The SCA agreed with the finding of the court a quo below, namely:

1. What was required was a signature in the ordinary course namely in manuscript form, even if transmitted electronically, for verification and authentication purposes; and

2. Because the instruction was not accompanied by such a signature, the funds were transferred without proper instructions and contrary to the mandate.

The SCA concluded that because the emails were fraudulent in that they were not dispatched by a person with the authority to do so and were not accompanied by Mr. Fouché’s manuscript signature, they could not be binding on him.

There are a variety of safeguards that can be implemented to avoid situations such as these.

Should you require any assistance or advice in respect of these safeguards or any other issue concerning electronic signatures and their validity, please contact our offices at 021 424 4599 or info@thomsonwilks.co.za.

#onlinesignatures #electronicsignatures #fraud #security #thomsonwilksattorneys #thomsonwilksinc

17 February 2023


All Rights Reserved
©Thomson • Wilks 2024

View on desktop for an
optimal experience


Privacy policyterms & conditionspractice areasour teamacts & legislationnews & mediamake a payment

make a payment

Pay with

(coming soon)


We are proudly helping to build