One of the most common terms of commercial contracts are the 'so called' non-variation clauses that provide that the terms of written contracts cannot be added to or varied unless such addition or variation is reduced to writing and signed by all parties to the contract.
In today's world of electronic media and the demands of the commercial world, parties to contracts often resort to email correspondence when agreeing to vary or add to the terms of contracts.
The question arises whether email correspondence exchanged between contracting parties, the content of which has the effect of varying a written contract containing a nonvariation clause complies with the requirements of such clause.
Contracting by email is governed by Chapter III of the Electronic Communications and Transactions Act, No 25 of 2002 (Act).
An electronic signature is defined in the Act as meaning data attached to, incorporated in, or logically associated with other data and that is intended by the user to serve as a signature.
An advanced electronic signature is defined as an electronic signature that results from a process that has been accredited by the Authority as provided for in Section 37 of the Act.
A data message is defined, among others, as data generated, sent, received, or stored by electronic means.
Section 12 of the Act provides that a requirement in law that a document must be in writing is met if the document or information is in the form of data messages and accessible in a manner usable for subsequent reference.
In terms of Section 13(1) of the Act, 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. Subsection (2), which is made subject to subsection (1), provides that an electronic signature is not without legal force and effect merely on the grounds that it is in electronic form, with subsection (4) providing that where an advanced electronic signature has been used, such signature is regarded as being a valid electronic signature and to have been applied properly, unless the contrary is proved.
In terms of Section 12 of the Act, a requirement in law that a document must be in writing is met if the document is in the form of an email. It follows that a requirement imposed by parties that a document must be in writing is met if the document is in the form of an email. Therefore email communication purporting to vary the terms of a contract fulfills the first condition of the non-variation clause that any variation to the contract must be in writing.
With regard to the second requirement of the non-variation clause that the parties must sign the document that purports to vary the contract, the Act's definition of 'electronic signature' read with the definition of 'advanced electronic signature', is wide enough to cover the situation where the author of an email signs the email off by inserting his name.
In determining whether the insertion of one's name constitutes an electronic signature, the question is whether the author intended the insertion of his name to constitute his signature.
Section 13(2) of the Act clearly states that an electronic signature is not without legal force and effect on the grounds that it is in electronic form. This means that an electronic signature, as defined by the Act, is sufficient to fulfill the second requirement of the non-variation clause that the document must be signed by the parties.
It follows that email correspondence exchanged between the parties the content of which varies the terms of a written contract, which meet the requirements of Section 13 of the Act will constitute a lawful and valid variation of a contract.
Written by Lucinde Rhoodie, Director, Dispute Resolution Practice, Cliffe Dekker Hofmeyr