Contracts in the age of COVID-19
The current lockdown-related restrictions, including social distancing requirements, have posed challenges for parties intending to enter into contractual agreements. While many people may have access to a smartphone, tablet or computer and internet connection at home, not everyone has access to a printer and scanner. These circumstances have made it difficult for contracts to be signed and many parties have opted for verbal agreements or written undertakings.
While verbal contracts may be simple and convenient, especially under the current circumstances, one should note that verbally-agreed contractual terms are often more difficult to enforce in the event of a dispute. In addition hereto, legislation often requires certain contracts be reduced to writing or requires that an agreement prescribes to certain formalities to be valid (for example, suretyship agreements and leases with a duration of more than ten years).
Is a handwritten signature necessary?
Copies of electronic contracts, faxed and e-mailed versions of contracts, as well as scanned or electronically stored versions, are all feasible formats for legally binding contracts and are enforceable.
It is common for contracts to be executed in counterparts, with one person signing the contract and forwarding the contract in some form to the other party to the contract, who then signs it and transmits a countersigned version back, provided the contract allows for this.
Can a contract be signed electronically?
While most agreements may be signed electronically, certain agreements require a signature to be made by hand. Digital communications are recognised as legally valid in terms of the Electronic Communications and Transactions Act, no. 25 of 2002 (“ECTA”). ECTA allows for the use of electronic signatures or “digital signatures” provided certain requirements are met.
An ordinary electronic signature is described in terms of 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. Both ordinary and advanced digital signatures that may be used in respect of transactions, depending on the circumstances. Acceptable examples of digital signatures include signatures created using a stylus, cursor or your finger (on a device such as a tablet) and uploaded images and/or photographs of a handwritten signature.
It is important to remember to keep your electronic signature safe and secure. Take the necessary precautions to ensure that an image of your signature cannot be easily obtained or without your knowledge or consent.